Vale SA, the world’s largest iron-ore miner, fell to a 10-year low as a bear market for the raw material deepened, adding to losses on Brazil’s benchmark Ibovespa index.
Shares of Vale extended a three-day decline and fell to the lowest since June 2005. Iron ore dropped below $50 a ton for the first time since April on concern low-cost supplies from producers including Brazil will expand further while demand stumbles in China. The Rio de Janeiro-based miner accounts for about 6 percent of the Ibovespa’s weighting.
“Vale is sinking the Ibovespa,” Vitor Suzaki, an analyst at the brokerage Lerosa Investimentos, said in a phone interview from Sao Paulo. “It’s hard to tell where iron-ore prices will stabilize. There’s also a lot of uncertainty about China’s demand.”
The Ibovespa fell 0.9 percent to 51,705.18 at 3:36 p.m. in Sao Paulo. Vale declined 2.1 percent to 14.66 reais. The MSCI Brazil/Materials Index slumped 3.3 percent.
Air carrier Gol Linhas Aereas Inteligentes SA slumped to a two-year low as the Brazilian real weakened. The company has 64 of its debt denominated in foreign currency. Shopping mall operator BR Malls Participacoes SA fell as Itau BBA cut its stock rating to the equivalent of hold.
Frozen-dinners maker BRF SA rallied the most in two months after being added to a new Euronext Vigeo stocks portfolio of sustainable emerging-market companies.