Rio optimistic on demand for metals

In its 2007 report, Rio Tinto is forecasting that demand for metals will remain strong despite the threat of a recession in the US.

The world’s biggest aluminium producer is mindful of the expected slowdown in the US economy but says that predictions that the price cycle for its products have peaked are premature.

The group’s chairman, Paul Skinner, points out that “the US is now somewhat less important in world commodity demand than it was five years ago.”

Adding: “In the short term, with low commodity stocks and a likely continuation of supply side challenges, we expect solid global economic growth, led by China, to support strong increases in demand for most metals and minerals during 2008 and 2009.”

Mr Skinner believes that even a sharp slowdown in the US would have only a modest impact on the key growth markets of China and India and is also suggesting that demand for aluminium and copper could triple over the next 25 years.

Finally, the report restates the view taken by Rio’s board that BHP Billiton’s offer for the group undervalues the company and its prospects for growth.