Rio Tinto(US:RIO) Fo Shan Jin Kong Qi Huo·2025-11-13 06:53Report's Investment Rating for the Industry There is no information provided regarding the report's investment rating for the industry. Core Viewpoints of the Report - In Q3, the cumulative global iron ore shipments turned positive year-on-year, mainly due to the increase in Chinese imports [1]. - Among the Big Four mines, FMG and Vale had strong shipments, while Rio Tinto's shipments this year may be at the lower end of the guidance target. However, the guidance targets of the Big Four mines remain unchanged, so the iron ore supply will still be strong in Q4 [1]. - With a strong iron ore supply and negative feedback from finished products on the demand side, fundamental contradictions are accumulating, and port inventories are increasing. The subsequent trend this year will be sideways with limited upside potential [1]. Summary by Relevant Catalogs 1. Global Shipments - As of Q3 2025, global iron ore shipments reached 1.20 billion tons, a year-on-year increase of 2.39%. The increase in Q3 shipments (422 million tons) was mainly due to a significant increase in Chinese imports (326 million tons) [2]. - Structurally, as of Q3, the cumulative shipments from Australia and Brazil were 1.00 billion tons, a year-on-year increase of 1.25%, while those from non-Australia and Brazil regions were 200 million tons, a year-on-year decrease of 4.51% [4]. - As of September, China's cumulative iron ore imports were 919 million tons, a year-on-year increase of 0.05%. In the first eight months, cumulative imports were negative year-on-year, but imports increased in the second half of the year due to higher steel mill profits and strong demand [4]. - In the first three quarters, China imported 560 million tons of iron ore from Australia, a year-on-year increase of 1.69%, accounting for 61% of the total imports, and 196 million tons from Brazil, accounting for 21% [7]. 2. Big Four Mines 2.1 Summary of Supply in the First Three Quarters - As of mid-October 2025, the cumulative shipments of the Big Four mines were 877 million tons, a year-on-year increase of 0.53%. FMG had the largest increase, Vale's shipments increased slightly year-on-year, while BHP and Rio Tinto's shipments decreased [8]. Rio Tinto - Rio Tinto's shipments may be at the lower end of the target. The shipments from its Pilbara mining area increased significantly in Q3, but its shipments in the first three quarters decreased year-on-year due to the impact of a hurricane in Q1 [11]. - The grades of PB fines and lumps decreased. In Q3, the shipments of PB fines and lumps increased significantly, while those of SP fines and lumps decreased significantly [13]. - The progress of the Simandou project (designed capacity of 60 million tons/year) exceeded expectations. It is expected to load the first batch of iron ore in October and ship in November, earlier than expected by one month. The capacity is expected to increase significantly in 2026 [14]. FMG - FMG's production and sales increased year-on-year, and the guidance target remained unchanged. In Q3, its production was 50.8 million tons, a year-on-year increase of 6%, and shipments were 49.7 million tons, a year-on-year increase of 4% [16]. - The guidance target for shipments in the 2026 fiscal year remained unchanged at 195 - 205 million tons, and the C1 cost target remained unchanged at $17.5 - $18.5 per wet ton [16]. BHP - BHP's Q3 shipments decreased, and the guidance target remained unchanged. Its Q3 production in Western Australia was 70.25 million tons, a year-on-year decrease of 2%, mainly affected by the reconstruction of the Car Dumper 3 project at Port Hedland [19]. - The guidance target for the 2026 fiscal year remained unchanged, about 2 million tons higher than that of the 2025 fiscal year. The average iron ore selling price in Q3 2025 was $84.04 per ton, a 5% increase both quarter-on-quarter and year-on-year [21]. Vale - Vale had strong production and sales in Q3. Its Q3 iron ore production was 94.4 million tons, a year-on-year increase of 4%, mainly due to the production increase in the S11D in the northern system, Minas Centrais in the southeastern system, and Vargem Grande in the southern system [23]. - Vale's Q3 sales were 86 million tons, a year-on-year increase of 5%. It adjusted its product strategy, reducing the sales of high-grade IOCJ fines by 52% year-on-year and increasing the sales of medium-grade fines such as Brazilian Blend and Carajas fines [23]. 2.2 Outlook for Future Supply - Overall, the guidance targets of the Big Four mines remain unchanged. Rio Tinto's shipments may be at the lower end of the target, while Vale's production is moving towards the upper end of the target, and FMG has strong production and sales. Therefore, it is expected that the mine shipments will still be strong in Q4, and there will be some supply pressure on iron ore [25]. 3. Fundamental Analysis 3.1 Domestic Supply - As of September, China's cumulative production of iron ore raw ore was 761 million tons, a year-on-year decrease of 2.55%. The cumulative production of iron concentrate from 433 domestic mines was 207 million tons, a year-on-year decrease of 4.13%. China's demand for iron elements is highly dependent on imports [26]. 3.2 Demand - As of the end of September, the cumulative crude steel production was 746 million tons, a year-on-year decrease of 2.89%, and the cumulative steel production was 1.104 billion tons, a year-on-year increase of 5.68%. The cumulative iron ore production of 247 sample steel enterprises was 648 million tons, a year-on-year increase of 3.45% [27]. - As steel mills have a certain profit margin, the iron ore production remains high, supporting the demand for iron ore. However, the weak demand for finished products is expected to reduce the demand for iron ore in the future [27]. 3.3 Inventory - Due to the contradiction between the strong supply and weak demand of iron ore, the port iron ore inventory has been continuously increasing, with certain inventory pressure. The steel mill inventory is currently maintained at around 90 million tons, and the overall inventory is at a low level [31]. - At the port end, due to the high inventory pressure last year, the year-on-year import of iron ore decreased in the early part of this year, and the port inventory continued to decline. However, with the recovery of steel mill profits and the increase in foreign ore shipments, the port has started to gradually accumulate inventory, and the current inventory is 150 million tons, with certain inventory pressure [33]. 4. Future Outlook - In the context of weak demand for finished products, the decline of iron ore in the first half of the year was smaller than that of coking coal and coke. After June, the prices of coking coal and coke continued to rise, while the increase of iron ore was less than that of coking coal and coke [34]. - Looking forward, this year's crude steel reduction is expected to be mainly through the independent production cuts of steel mills. The policy space for the demand side of finished products may be limited in the future. The supply side of iron ore remains strong, while the demand continues to weaken. Therefore, it is expected that iron ore will remain sideways in the future, but the upside potential is limited [35].