Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF) has been hit with a downgrade from US bank Citi after a 27% rally over the past year has eroded its deep valuation discount.
Citi adds that it still has Chinese macro concerns and despite incentive measures from the government there, there is still little support for steel demand all the property indicators are still in deep contraction.
“While the recent Politburo meeting pledged to support the property sector through supply and inventory management (to stabilise house prices and sales), Citi thinks this is unlikely to stimulate incremental steel demand.
“Furthermore, China steel mills are now loss-making again and we are heading into a period of seasonal weakness for mining equities.”
Neutral is now the rating from overweight, with an unchanged target price of £60.
Shares eased slightly to £57.59.