As you might already know, China’s growth and the Fed’s money printing press have been inflating assets everywhere… especially, in Brazil.
Brazil’s iBovespa has been down big time this year… and the trend may continue. Including VALE.
“We expect the iron ore prices to fall by approximately 30% in 2011 and 9% the next year, after which, prices may settle down at around $100/ton levels. This could weigh on company’s stock price.
The continuous build up of iron ore inventories in China, the world’s largest producer and importer of iron ore, over the past few years will help it reduce its reliance on external iron ore and price shocks. Also the three largest iron ore miners globally Vale, BHP Billiton and Rio Tinto are investing heavily in expanding their mining production to meet anticipated demand from emerging markets.”
The article discusses only “overcapacity” issues, and it fails to mention China’s slowdown, which might play a more critical role on pushing down the stock price further.
Full article here: “Iron Ore Oversupply Could Weigh On Vale“.