JP Morgan analysts expect demand for iron ore from China will grow more slowly than expected, cutting estimates to 3.5% growth from 5% growth. Vale rivals Rio Tinto (RIO), BHP (BHP), and Fortescue (FSUMF) are expected to add pressure to pricing by adding about 100 metric tons of supply in 2014.
Iron ore spot prices rose 4% to $166.8 a ton in Shanghai Monday.
Despite the lower price forecast Vale says it will generate positive cash flow through 2014.
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TheStreet Ratings team rates VALE SA as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate VALE SA (VALE) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."