Vale SA, the world’s largest iron-ore producer, headed for its biggest two-day drop in more than two months, pushing down the Bovespa index after prices for the raw material fell to its lowest in almost a year.
Vale’s preferred stock dropped 2.4 percent to 37.81 reais and voting shares lost 2.5 percent to 40.34 reais in Sao Paulo at 12:41 p.m., accounting for about a fourth of the index’s decline. The two classes of shares headed for a two-day drop of more than 8 percent, the most since Aug. 9.
The price of ore with 62 percent iron content delivered to the Chinese port of Tianjin declined 2 percent to $150.30 a metric ton today, its lowest level since Nov. 3, according to the Steel Index. Iron-ore prices for immediate delivery fell about 15 percent in the past month on concerns China, the biggest consumer of the steelmaking ingredient, may slow its expansion as Europe’s debt crisis drags on a global recovery.
Vale will cut the price of iron ore sold to Chinese steel mills to $160 per metric ton from $175, China’s Economic Information Daily reported, citing an unidentified official from a Chinese steelmaker. The Rio de Janeiro-based company sent a letter on the price cut after several steelmakers had requested a price adjustment, the newspaper said.
A Vale official in Rio de Janeiro, who declined to be named citing corporate policies when contacted by Bloomberg News today, said the company had no comments on pricing negotiations.
Shares of MMX Mineracao & Metalicos SA, the iron-ore producer controlled by Brazilian billionaire Eike Batista, fell 2.6 percent to 6.70 reais. Shares of Metalurgica Gerdau SA, the parent of Latin America’s largest steelmaker, lost 2.7 percent to 16.39 reais, the biggest drop in the Bovespa index.
Bradespar SA, which owns an indirect stake in Vale through the miner’s controlling shareholder, Valepar SA, slipped 2.6 percent to 31.60 reais.
Brazilian banker Daniel Dantas, owner of asset manager Opportunity, may increase his stake in Valepar to 3 percent from 0.03 percent after an arbitration chamber ruling, Valor Economico reported, citing unidentified people with knowledge of the matter. Bradespar will appeal the decision, which allows Dantas to buy the shares for less than their market price, the Sao Paulo-based newspaper said.