Vale Leads Best Metal Stock Rally Since 2008 as China Woes Ease – by Chiara Vasarri and Sonja Elmquist (Bloomberg News – March 4, 2016)

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Cliffs Natural Resources Inc., Vale SA and U.S. Steel Corp. paced the biggest weekly rally in seven years for mining and metals shares as investors wagered that a rebound in prices and efforts to cut spending and debt will return them to profitability.

The BI Metals Mining and Steel Aggregate Index of 47 producers is up 20 percent this week. Copper suppliers Freeport-McMoRan Inc. and Teck Resources Ltd. were also among the biggest gainers. Copper climbed to the highest in about four months on speculation top user China will announce more steps to bolster growth.

Vale’s 51 percent rally is the Rio de Janeiro-based company’s steepest weekly advance since 1999, as iron ore prices extended a rebound and Brazilian stocks jumped on bets that a political gridlock in the country may be closer to ending. Anglo American Plc capped its seventh straight gain, the longest winning run in two years.

The mining and metals index is still down about 16 percent in the past year after commodity prices collapsed as a sharper-than-expected slowdown in Chinese demand coincided with rising supply, creating gluts. Producers have been selling assets and cutting capital expenditure to prop up their balance sheets.

“We see a stabilization in commodity prices, capex has been reduced, new projects delayed and some have even reduced output,” Patrik Kauffmann, who helps manage $11 billion of assets at Solitaire Aquila Ltd., said from Zurich.

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