Vale Slumps as Iron-Ore Prices Sink to Two-Year Lows

Vale SA (VALE5) dropped the most since April, capping the longest losing streak in eight months, as slumping iron-ore prices dimmed earnings prospects of the world’s biggest producer.

Shares declined 4.1 percent to a two-month low of 26.13 reais at the close in Sao Paulo today, the most since April 15. The stock, which traded at 3.7 times its average three-month volume, was the worst-performer among its five main rivals on the BI Global Diversified Mining index.

Iron ore for immediate delivery slid 1 percent to $87.30 a metric ton today, the lowest since Sept. 6, 2012, according to data compiled by The Steel Index Ltd. The steelmaking ingredient’s price decline, combined with weaker demand from its main client China, is hitting Vale shares, said Elad Revi, an analyst at brokerage Spinelli.

“The average iron-ore price for the year is falling and this impacts directly on the results of Vale,” he said by telephone from Sao Paulo. “Until this stabilizes, Vale will go through strong oscillations.”

Cia. Siderurgica Nacional SA, Brazil’s second-largest listed iron-ore producer, fell 5.1 percent to 9.96 reais, the lowest since July 2.

To contact the reporter on this story: Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net Robin Saponar

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.