Rio Tinto shares up, Q2 iron ore shipments come in below expectations
We examine the highlights of Rio Tinto's second quarter production results.
The Rio Tinto (RIO) share price rose after the large-cap miner revealed a strong set of second quarter results to the market on Friday, 17 July. Rio Tinto's Chief Executive Officer, J-S Jacques described these results as demonstrating the resilience and adaptability of the mining giant’s underlying business; while going on to note that:
'We are executing our value over volume strategy to drive performance, productivity, and free cash flow per share. We will remain agile and ready to adapt to the changing operating and macro environment.'
At the time of writing, the Rio Tinto share price was up 0.36%, to $103.88 per share.
Q2 results at a glance
Overall, and looking at Rio Tinto’s just-released production results, on a year-over-year basis, the miner today reported:
- Iron ore shipments of 86.7 million tonnes, up 1%
- Bauxite production of 14.6 million tonnes, up 9%
- Aluminium production of 785 kilotonnes, down 2%
- Titanium dioxide slag production of 262 kilotonnes, down 13%
Maybe most importantly however, Rio Tinto said that it was on track to hit its full-year 2020 iron ore guidance. Even so, it should be noted that today’s quarterly Q2 shipment results came in somewhat below what analysts were expecting.
As noted above, Rio Tinto reported Pilbara iron ore shipments (100% basis) of 86.7 million tonnes, representing a year-over-year increase of just 1%, but a quarter-over-quarter increase of 19%. For reference, analyst estimates heading into the Q2 stood at 87.3 million tonnes, according to Bloomberg.
Quarterly iron ore production (100% basis) reached 83.2 million tonnes.
This comes as demand for iron ore continues to recover in China – arguably the miner’s most important market. Speaking of the conditions within the Chinese market, it was noted that, 'While employment and trade uncertainties remain, the construction and infrastructure sectors are performing well; house prices and stock markets are also recovering, lending support to consumer confidence.'
Demand in Japan and Europe however, has yet to meaningfully recover.
Elsewhere, management said that during the quarter 1.7 million tonnes of iron ore were sold through port sales. This move, said the company, is part of a push 'to better serve our existing customers and open opportunities to sell to new customers who do not participate in the seaborne market.’
Other bits and pieces
Looking forward, the company noted that total 2020 capital expenditure (CAPEX) is expected to come in at around $6 billion (previously guided at between $5 to $6 billion). 2021 and 2022 CAPEX is expected to come in at around $7 billion per share.
Previously stated full-year production guidance across Rio’s main commodities were reiterated as part of today’s Q2 update.
How to trade Rio Tinto
What do you think: are you bullish or bearish on Rio Tinto’s prospects in the wake of today’s Q2? Trade accordingly. For example, you can trade Rio Tinto shares and other large-cap mining stocks – both LONG and SHORT – through IG’s world-class trading platform now.
To buy (long) or sell (short) Rio Tinto with CFDs, follow these simple steps:
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.