Vale Stock Gains Despite Industry Oversupply Caution

NEW YORK (TheStreet) -- Vale S.A. (VALE) shares are up 0.33% to $6.83 in early market trading on Wednesday despite comments from BHP Billiton  (BHP) CEO Andrew Mackenzie that put negative pressure on the mining industry today.

Mackenzie, CEO of the world's largest mining company, said that the current oversupply on the market would keep prices low for the foreseeable future, according to Bloomberg.

"In many markets, recently installed low-cost supply can now be stretched to meet growing demand. Incremental supply, induced during periods of higher prices, will take longer to absorb and this means over-supply may persist for some time," Mackenzie said.

Analysts at UBS Group estimate that the global surplus of iron ore from the industries largest producers will increase to 215 million tons in 2018 from its current level of 45 million this year, according to Bloomberg.

TheStreet Ratings team rates VALE SA as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate VALE SA (VALE) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

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