Vale and BHP Billiton Under StockCall Microscope: Improving Chinese Economy a Good Sign

Vale and BHP Billiton Under StockCall Microscope: Improving Chinese Economy a
                                  Good Sign

  PR Newswire

  LONDON, February 4, 2013

LONDON, February 4, 2013 /PRNewswire/ --

Last week, two surveys showed that manufacturing activity in China, the
world's fastest growing major economy and an engine of global economic growth,
expanded in January. The data further confirms the Chinese economy is
improving. This augurs well for industrial metals and minerals companies such
as Brazil's Vale SA (ADR) (NYSE: VALE) and global mining giant BHP Billiton
Limited (ADR) (NYSE: BHP). StockCall has released preliminary technical
research on Vale and BHP Billiton. Sign up today for full access to those free
reports at 

China Weakness Hurt Mining Companies in 2012

China's demand for raw materials has been one of the main reasons for the
commodity bull-run in the past decade. As Chinese economy grew at a brisk
pace, its demand for raw materials from iron ore to copper grew. This meant a
period of record revenue and profits for mining companies. However, 2012
turned out to be a tough year for mining companies as the Chinese economy saw
a sharp slowdown.

At the start of 2012, concerns heightened that the Chinese economy was headed
for a hard landing. This had a significant impact on mining companies. A weak
U.S. economy, Eurozone debt crisis and slowdown in other emerging markets also
hurt mining companies.

Back in August last year, mining giant BHP Billiton announced that it will not
expand its Olympic Dam project. The company cited current market conditions,
including subdued commodity prices and higher capital costs, as the reason for
not expanding the project. Instead, the company said that it will look at an
alternative, less capital-intensive design of the Olympic Dam open-pit
expansion, involving new technologies, to significantly improve the economics
of the project. Download today's free technical report on BHP Billiton can be
accessed by signing up at

BHP's decision was justified given the weakness in the global economy.

China's Improving Economy a Good Sign

In mid-2012, there were growing concerns that the Chinese economy will be
seeing some hard times. With the U.S. economy still recovering and Eurozone in
trouble, this was the last thing the global economy needed. However, concerns
were eased late last year as the Chinese economy began to show signs of
improvement. The trend has continued in 2013.

Last week, China Federal of Logistics and Purchasing reported that its
purchasing managers' index stood at 50.4 in January. HSBC Corp., meanwhile,
reported that its purchasing managers' index stood at 52.3 in January. A
reading of above 50 indicates expansion. The latest data from China further
confirms the fact that the world's second-largest economy is improving. The
data comes shortly after a report showed that the Chinese economy expanded
7.9% in the fourth quarter.

Given the improving Chinese economy and ultra-loose monetary policy in
developed world, demand for commodities could rise this year, which is a good
sign for Vale and BHP.

Vale Expects Iron Ore at $110-$180/Ton

Earlier last week, Vale CFO Luciano Siani said that demand for iron ore from
emerging market will keep prices between $110 and $180 per ton over the
long-term. Declining iron ore prices last year had a significant impact on
Vale. The comprehensive technical analysis on Vale is available upon
registration at

Roberto Castella-Branco, Vale's head of investor relations, this week said
that prices for iron ore would be supported by growth in markets such as

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