Market Report: Rio Tinto lifts the gloom as upbeat forecasts give commodities a fillip

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The commodities sector owed much to mining giant Rio Tinto today, after it provided a rare piece of good news on global demand.

A supply glut and growing fears of a slowdown in China — the world’s largest consumer of commodities — has led to a punishing few months for the sector but, in a presentation to investors, Rio insisted all was not lost.

By its “rigorous analysis”, global demand for steel will rise by 2.5% a year for the next 15 years, and Chinese crude steel production will hit around 1 billion tonnes by 2030.

Emerging markets should also help relieve the pain caused by China, it added, with non-Chinese steel demand forecast to jump by 65% in the same period.

Shares in the business, which also announced greater efforts to save costs at its giant Pilbara mine in Australia, leapt 87p to 2352.5p, helping to reverse some of their near-15% drop so far this year.

Pulled up with it were Anglo American, up 30.5p at 714.3p, Antofagasta, 18.5p higher at 596p, and BHP Billiton, which rose 33p to hit 1097.5p.

After days of languishing at the bottom of the Footsie, bargain hunters helped to push Glencore to the other end of the leaderboard: shares were up 5.65p to 128.45p.

It was joined there by surpermarket Wm Morrison, which climbed 7.4p to 170.5p after an upgrade to Neutral from Sell from UBS.

Like Asian and European markets, Britain’s FTSE 100 was in the black, up 109.4 points at 6192.71, no doubt helped by the fact Chinese markets — a trigger of much of the recent turmoil — were shut for a public holiday.

However, figures from Michael Spencer’s firm, interdealer broker Icap (up 7.1p to 457.5p), suggested that investors are still wary of China, as average daily volumes in safe haven US Treasuries, rose 25% to $182.7 billion (£119.8 billion) on its electronic markets in August.

Amid the small-caps, self-storage firm Safestore rose 8.25p to 303.5p, after revealing its third quarter revenue had risen 7.2% to £26.7 million. Investec praised the “positive trading momentum” and upgraded its full-year occupancy estimates.

On AIM, an agreement with a Zimbabwean company to supply 150,000 metric tonnes of fertiliser lifted African Potash 0.25p to 2.4p.

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September 3, 2015 |
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