RIO Rio Tinto Plc

   By Rhiannon Hoyle 
 

SYDNEY--Rio Tinto PLC (RIO.LN), the world's second-biggest publicly listed miner by value and one of the biggest iron-ore exporters, reported full-year earnings for 2018 on Wednesday. The miner said net profit jumped 56%, largely because of gains from asset sales, and that it would pay a final dividend worth US$3.1 billion and a special dividend worth US$4 billion. Here are some remarks from the report:

On iron-ore demand:

"Demand for the high-quality, higher grade iron ores we produce remained strong in 2018. This was driven by Chinese environmental policy and the supply-side reform of the steel sector. With Chinese steel mills continuing to chase productivity, prices for 62% iron ore remained relatively stable, while prices for 58% iron ore traded at a 42% discount (on average) to 62% iron ore in 2018. Around 90% of our Pilbara products are priced with reference to the 62% index."

On iron-ore supply:

"2018 seaborne iron ore supply was essentially flat compared to 2017. Expansions from the major producers were mostly offset by high-cost, low-quality supply exiting the market, coupled with significant operational disruptions and industrial disputes. China's domestic supply dropped to 240 million [metric tons] in 2018."

On steel production:

"Global steel markets were resilient in 2018, supported by record Chinese crude steel production of 928 million [tons]. Chinese steel inventories declined, highlighting healthy end-use demand. Steel demand outside China was also robust. India overtook Japan as the world's second-largest steel producer, and Europe's steel demand and production sustained its growth momentum."

On scrap steel:

"Scrap use increased, with up to 50 million [tons] of new electric arc furnace capacity expected in the next five years. Scrap use will remain limited by availability, quality, location and economics, and we expect EAF utilization rates to stay below 70%."

On bauxite market outlook:

"Strong growth in seaborne bauxite in 2018 was driven by demand from China. This was met by rising exports from Australia and Guinea, and some Indonesian exports, which accounted for the bulk of the supply increase. There are significant uncertainties around the direction of the bauxite market primarily due to the recent and substantial growth in bauxite mine capacity in Guinea and uncertainties regarding the impact of supply reforms underway in China."

On copper supply:

"On the supply side, fewer major new projects or expansions, plus lower volumes from some of the largest producers, are expected to result in a decline in mined copper production growth in 2019. This is in contrast to growth of 3.4% in 2018."

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

February 27, 2019 01:55 ET (06:55 GMT)

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