UPDATE 2-Big miners:slower China steel growth to weigh on iron ore – by James Regan and Manolo Serapio Jr. (Reuters U.S. – March 19, 2013)


PERTH, March 19 (Reuters) – Australia’s big iron ore miners have cautioned that China can no longer be counted on for unchecked opportunity, warning of volatile markets and softer prices as growth in China’s steel production slows.

The big miners are sticking to aggressive expansion plans to feed Chinese demand for iron ore, even after the market was rattled for much of last year by doubts over future demand from China.

Rio Tinto , BHP Billiton and Fortescue Metals Group, the world’s second, third and fourth biggest iron ore miners behind Brazil’s Vale, plan to add a combined 235 million tonnes of new mine capacity by 2015, nearly equal to Rio’s total output in 2012.

“We’re seeing steel demand growth slowing inevitably. That is going to put downward pressure on iron ore prices,” Greg Lilleyman, Rio’s head of Pilbara iron ore operations, told a conference here on Tuesday.

“We’re going to see downward pressure in the second half and perhaps beyond, but we still see pretty strong prices,” he added. BHP’s Tony Ottaviano, vice president of planning, said iron ore prices would “remain volatile” as more supply hits the market at a time of moderating Chinese demand.

Rio Tinto forecasts steel demand to grow by about 3 percent a year for the next 5-10 years. This is well down on 10 percent growth rates in 2009-2011.

Iron ore prices shed more than 9 percent last week as a drop in Chinese buying fueled concerns that a hoped-for pickup in construction activity was not occurring.

Benchmark 62-percent grade iron ore stood at $134.60 a tonne on Tuesday, hovering just above a near three-month low hit late last week, but still well up on a price below $87 a tonne in September last year.

Citigroup forecast an average selling price for 2013 of $120 a tonne, but others are less bullish, with UBS suggesting iron ore prices could tumble as low as $70 a tonne, although probably not this year.

For the rest of this article, please go to the Reuters U.S. website: http://www.reuters.com/article/2013/03/19/australia-ironore-riotinto-idUSL3N0CB6Q520130319