Chinese iron ore futures reversed early losses to trade flat on Thursday, supported by firmer equities and global miner Rio Tinto trimming its full-year shipment guidance due to weather disruptions. Rio Tinto, the world's No 2 iron ore producer, cut its 2015 target for shipments by nearly 3 percent, or 10 million tonnes, to around 340 million tonnes after two cyclones swept through its mines and ports in March and May.
While the 10 million tonnes that would be cut from shipments is relatively small, it "sends a signal to the market that Rio, which has been very reluctant to reduce production could cut back," said Helen Lau, analyst at Argonaut Securities in Hong Kong.
"But they need to have more production discipline to support the iron ore price."
Iron ore for January 2016 delivery on the Dalian Commodity Exchange was unchanged at 355 yuan ($57) a tonne by midday, recovering from a session low of 345 yuan. Iron ore for immediate delivery to China's Tianjin port rose 1.4 percent to $50.10 a tonne on Wednesday, its highest since July 6, based on data from The Steel Index, supported by increased sales on trading platforms in Singapore and China as Chinese spot steel prices firmed.
The spot benchmark fell to as low as $44.10 last week, the lowest since at least late 2008 as oversupply concerns twinned with tumbling equity markets in China. Rio said second-quarter iron ore output of 79.7 million tonnes was 9 percent higher than the same quarter in 2014 and 7 percent above January-March production this year. Its forecast for 340 million tonnes in full-year shipments would still be up 15 percent on 2014.
"Increasing export volumes from Australia and Brazil suggest producers continue to chase market share at the expense of price," ANZ Bank analysts said in a report. Amid a weaker steel market in China, this could lead to a rebound in iron ore inventories at Chinese ports, "suggesting lower prices in the near term," they said.