Is It Time To Bottom-Fish For Vale SA?
Stephen Simpson, CFA • 41 Comments
Stephen Simpson, CFA • 41 Comments
Vale... Ya? Not Yet. Still Reckless, Not Contrarian.
Andres Allende, CFA • 33 Comments
Andres Allende, CFA • 33 Comments
Tue, May 24, 5:35 PM
Fri, May 20, 2:30 PM
- Iron ore stockpiles at Chinese ports have climbed above 100M metric tons, offering further evidence of increased supplies in the world’s top steel consumer that may hurt prices, Bloomberg reports.
- Port inventories rose 1.6% this week to 100.45M tons, the highest level since March 2015, while expanding 7.9% YTD, and are now large enough to cover more than five weeks’ of imports.
- Iron ore with 62% content gained 2.7% to $54.89/dry ton today but have tumbled 22% since peaking at more than $70/ton in April, paring the YTD gain to 26%.
- Goldman Sachs has warned that supply growth will accelerate this year, potentially feeding a glut and driving iron ore as low as $35 during Q4.
- A BHP Billiton (BHP -1.3%) VP of marketing minerals says port stockpiles in China, which have risen this year even as demand rebounded, may continue to increase through the rest of the year; other relevant tickers include Vale (VALE -2.5%) and Rio Tinto (RIO -1.6%).
Tue, May 17, 11:48 AM
- Brazil's new Environment Minister says he will not allow the reopening of the Samarco iron ore mine without assurances that the causes and damages of last year's deadly tailings dam collapse were fixed.
- The mine, a 50-50 joint venture between Brazil's Vale (VALE +5.6%) and Australia's BHP Billiton (BHP +3.8%), still needs to secure the necessary permits to resume operations.
- Samarco, Vale, BHP and the Brazilian government, including the environment ministry, signed a 20B real ($5.71B) accord in March to clean up the disaster area and compensate victims, and government and company officials said the mine could reopen by the end of the year.
Wed, May 11, 5:35 PM
Mon, May 9, 9:14 AM
Fri, May 6, 9:53 AM
- The Brazilian prosecutors’ argument linking the Samarco disaster to the BP oil spill does not hold up, and Brazil does not have the same stranglehold on Vale (VALE +3%) and BHP Billiton (BHP +0.1%) as the U.S. had on BP, Bernstein analyst Paul Gait says.
- Investors were surprised this week by the $44B damages claim over last year's deadly tailings dam collapse at the Samarco mine because BHP and Vale reached agreement on a much smaller settlement in March, but Gait believes those worries are overdone.
- For example: The U.S. could have banned BP from the domestic oil market, as BP’s sales to U.S. consumers accounted for a third of company revenue, but Vale’s sales to Brazilian customers account for 7.5% of revenue and BHP’s domestic sales only 1.6%.
- Now read Vale: Crippling debt but modest potential
Wed, May 4, 9:19 AM
- BHP Billiton (NYSE:BHP) -5.6% and Vale (NYSE:VALE) -5.3% premarket after Brazilian prosecutors reveal their $43B claim for damages related to the November tailings dam burst, considered the country ’s worst ever environmental disaster.
- The damages claim has been based on the clean-up costs of BP’s Deepwater Horizon accident in the U.S., as “preliminary studies show the human, economic and socio-environmental impacts of the collapse of the dam are, at least, equivalent to those verified in the Gulf of Mexico," the prosecutors say.
- BHP says it had not yet received any formal notice of the legal claim but “remains committed to helping Samarco to rebuild the community and restore the environment affected by the failure of the dam."
- Brazilian prosecutors have a reputation for demanding very high compensation payments, although settlements sometimes are reached for a much lower cost, as happened with Chevron in 2011 over an oil spill off the coast of Rio de Janeiro.
Wed, May 4, 9:10 AM
Thu, Apr. 28, 2:37 PM
- Vale (VALE +3.5%) believes the global iron ore market is in better shape than expected, and sees China's demand for iron ore picking up this year on the back of government stimulus measures.
- CEO Murilo Ferreira said in today's earnings conference call that he had been pleasantly surprised by the health of the Chinese market during a visit to the country in March.
- “I think you guys exaggerated the pessimism regarding the scenario we were facing in China,” Ferreira told analysts on the call.
- Shares have been higher throughout the day after reporting Q1 earnings and revenues that came in ahead of expectations.
- Also higher today: BHP +2.6%, RIO +3.5%, MT +4.8%.
- Now read Goldman sees iron ore headed back to $35 as glut returns
Wed, Apr. 27, 12:52 PM
- Navios Maritime (NM -8.8%) is downgraded to Sell from Neutral with a $1 price target at Citigroup, which says shares have recovered “a bit too quickly” and are trading “too far from recent lows.”
- "Recent improvement in dry bulk rates and prospects for further improvement do not warrant material optimism that the worst is necessarily behind us,” says Citi's Christian Wetherbee, adding that while rates may continue to improve, even at higher rates several companies that would continue to burn cash, and NM would be one of them.
- Wetherbee also says the recent news that Vale (NYSE:VALE) would not be able to honor its contract for iron ore loading through Navios Logistics’ facility, which is under construction in Uruguay, poses "a material headwind to improving valuation."
- Now read Activism halts Navios malfeasance
Wed, Apr. 13, 9:16 AM
Fri, Apr. 8, 12:44 PM
- The Samarco joint venture between Vale (VALE +8.7%) and BHP Billiton (BHP +4.2%) will not receive government authorization to resume iron ore mining operations at the site of November's tailings dam burst until all leaks are stopped, Brazilian environmental protection officials tell Reuters.
- The restart depends on authorization from the Minas Gerais state environmental agency, which says Samarco needs to find a solution for the leaks from dikes built after the dam burst.
- Samarco hopes to resume operations at the start of Q1 to help pay for a 20B real ($5.53B) damages settlement.
- Now read What the capex cut means for Vale investors
Fri, Apr. 8, 11:48 AM
- Australia is bullish about iron ore prices for the next five years, raising its iron ore forecast to an average $45/metric ton in 2016 from a December outlook for $41.30.
- As high-cost miners close, Australian producers will boost shipments, and prices will rise to $56/metric ton next year, $61.40 in 2018 and $64.70 in 2021, Australia’s Department of Industry, Innovation & Science says in its quarterly outlook.
- Iron ore's surprise YTD price rebound has swayed few skeptics, with Goldman Sachs and others reiterating bearish forecasts, but Australia projects that its giant low-cost producers BHP Billiton (BHP +4%) and Rio Tinto (RIO +4%), together with Brazil’s Vale (VALE +7.3%), will claim a greater share of global trade and prices will climb.
- Now read Iron ore exports from Australia's Port Hedland expand to record
Fri, Apr. 1, 12:47 PM
- Vale (VALE +3.1%) is finalizing a proposal to exit a money-losing Brazilian steelmaking venture with ThyssenKrupp (OTCPK:TYEKF), Reuters reports.
- Under the draft plan, which has yet to be approved by Vale's board, the company would sell its ~27% stake in CSA Siderúrgica do Atlántico to partner ThyssenKrupp for $1, and Vale also would also agree to assume 10% of CSA's contingent liabilities, according to the report.
- Vale's planned exit from Brazil's most costly foreign investment project ever is the latest sign the steel mill has become a liability for both Vale and Thyssen, which tried unsuccessfully to sell the venture in recent years, Reuters says.
- Now read Report: Tata Steel eyes stake in ThyssenKrupp's Europe steel unit
Thu, Mar. 31, 9:56 AM
- Vale (VALE +1.6%) says partner Mitsui (OTCPK:MITSY, OTCPK:MITSF) has no plans to revise terms of a coal venture project in Mozambique, as reported by a local newspaper.
- Vale says a recent decision to reduce the accounting value of assets in the project "does not directly impact Mitsui's investment decision" in the project, and that the companies are working to conclude long-term financing for the venture.
- Mitsui could reduce its planned investments in the projects and change the terms of a project finance contract, originally expected to reach $2.7B, according to the local report.
- Now read Mitsui forecasts first loss since 1947 amid $2B in writedowns
Wed, Mar. 30, 5:39 PM
Vale SA engages in the production and export of iron ore, pellets, manganese, and iron alloys, which are raw materials needed for steelmaking. It operates through the following segments: Ferrous Minerals, Coal, Base Metals, Fertilizers and Others. The Ferrous Minerals segment includes the... More
Sector: Basic Materials
Industry: Steel & Iron
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