UBS has warned that Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF) is likely to lower its 2025 iron ore shipment forecast after storms and flooding disrupted operations in Western Australia.
The bank said Rio’s shipments have dropped 9 million tonnes year-on-year, marking their lowest level in more than six years.
it pointed to two major weather-related setbacks: flooding at a key rail facility in January and a three-day shutdown at Port Hedland, the world’s largest iron ore export hub, due to Cyclone Zelia.
With cyclone season lasting until April, the bank said recovering lost volumes will be challenging. It now expects Rio to revise its 323-338 million tonne Pilbara shipment target towards the lower end when it reports full-year results.
Despite these disruptions, iron ore prices have climbed from $99 per tonne in early January to $107 per tonne, supported by tighter supply.
However, UBS remains 'neutral' on Rio, citing weak Chinese steel demand and high inventory levels.
In the same note, the Swiss bank reiterated a 'buy' rating on BHP, saying its stronger production outlook makes it a better option in the sector.
The bank is neutral on Vale, warning of risks to its production recovery, and has downgraded Fortescue Metals to 'sell', pointing to falling ore grades and higher costs.