As China bids up high-quality ore premium, J.P. Morgan says buy Vale

China has been bidding up premiums for high-quality iron ore: The price of Australia lump is fetching a $17-$18.6/metric ton premium with 62% iron content - six months ago the premium was $8 - while pellets with 65% iron ore content are trading at a $40-$42/metric ton premium, up $10 in the same period.

It's good news for big miners such as Vale (VALE +0.6%), BHP Billiton (BHP +1%) and Rio Tinto (RIO +0.9%), which are among the top suppliers of high-grade ores.

J.P. Morgan says the higher premiums for pellets, lumps and for higher quality ore and the reduced risk of higher freight rates bodes well "for a company like Vale, which has high quality ore and pellets, we may see higher than expected realized prices driving earnings surprises."

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Comments (7)
  • Bigdog3004
    , contributor
    Comments (78) | Send Message
    Finally! I've been holding VALE since May and all it has done is go down!
    30 Jan 2014, 01:23 PM Reply Like
  • Santyapril
    , contributor
    Comments (82) | Send Message
    Very frustrating indeed to see the stock plummeting everyday. All the analysts keeps saying its a great buy but the stock is no where seen rising up!
    30 Jan 2014, 01:56 PM Reply Like
  • Skava
    , contributor
    Comments (2) | Send Message
    Don't feel bad I own it at 22 and have been sitting with it for quite a while.
    30 Jan 2014, 10:57 PM Reply Like
  • batt300
    , contributor
    Comment (1) | Send Message
    Frustrating. My biggest loser.
    30 Jan 2014, 06:09 PM Reply Like
  • graham downunder
    , contributor
    Comments (246) | Send Message
    The big Australian miners are Rio Tinto ,BHP ,Fortescue all benefit from the 15% reduced value of the Aussie dollar in the last 14 months . What does Vale benefit from ?
    30 Jan 2014, 10:48 PM Reply Like
  • McGonicle
    , contributor
    Comments (1509) | Send Message
    1) its a SA stock, and they are worse off than the US. They got the crappy bones left over from our QE feast. The problems are all there, not with US. Don't look behind the curtain. *sarcasm*
    2) base materials, esp. Iron, will always be supressed in price. That's just the new order of things. China is "shrinking" at +7.7% and the US is growing rampantly at +3.1% (just dont tell them its at -3.1% real...).
    3) they dont make anything out of iron anymore, including bridges, trains, ships or skyscrapers. And they aren't making any of those anymore, either (*sarcasm*)
    4) QE is deflationary, see. QE is also biflationary. See? Until you get that things will forever--and i mean FOREVER--get cheaper, you won't want to buy any company that makes anything or takes anything out of the ground. (*sarcasm*)


    all these are good reasons not to buy VALE (not sarcasm). The US equities ideology has a very special place in its heart for south american base materials companies---the toilet. This is because they make something, and America mostly makes....ideas.
    3 Feb 2014, 11:37 AM Reply Like
  • Catullus
    , contributor
    Comments (6) | Send Message
    Agreed, but most of the US ideas are bad ones from a world, or long-term, standpoint. US domestic policy seems to be to establish a fascist society as quickly as possible. US foreign policy seems to be 'everything belongs to us, give it to us freely, or we will come and smash you, then take what we want'.
    And they called the Soviet Union the Evil Empire!!!!
    3 Feb 2014, 03:20 PM Reply Like
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