Vale Joins Cliffs in Mining Rout as China Steel Outlook DimsJuan Pablo Spinetto
Vale SA, the largest iron-ore producer, fell to an eight-month low in Sao Paulo as prices for the steel ingredient slumped the most since 2009, pushing down mining stocks from Cliffs Natural Resources Inc. to Anglo American Plc.
Vale, based in Rio de Janeiro, fell 2.7 percent to close at 26.37 reais, the lowest since July 8. The Bloomberg World Mining index declined 2.5 percent, the biggest loss since July 5.
Iron ore extended a slide into a bear market on concern a possible economic slowdown in China, the biggest buyer of the mineral and destination for about half of Vale’s shipments, will reduce demand. Prices for immediate delivery plunged 8.3 percent to $104.70 a metric ton today, the most since Aug. 20, 2009, according to data compiled by The Steel Index Ltd.
Reduced lending in China and slowing steel demand growth may limit price increases, said Andreas Bokkenheuser, an equity analyst at UBS AG with a neutral recommendation on Vale shares.
“Weaker steel production growth and tight credit availability this time around could likely cap a seasonal price recovery in the second quarter,” he said in an e-mail today. “We expect Vale, alongside Brazilian steel and iron-ore producers, to remain under pressure in this environment.”
Cleveland-based Cliffs, the largest U.S. iron-ore producer, declined 3.8 percent to $17.95 in New York. Anglo, Africa’s largest iron-ore miner, lost 2 percent to 1,433 pence in London.