UPDATE 2-Brazil’s Vale slumps as ore price outlook, profit disappoints – by Guillermo Parra-Bernal and Marta Nogueira (Reuters U.K. – April 27, 2017)


Shares in Vale SA slumped the most in two weeks on Thursday, as executives signaled lackluster trends for iron ore prices this year and investors reacted to a first-quarter profit miss with disappointment.

Preferred shares, world No. 1 iron ore producer Vale’s most widely traded class of stock, shed as much as 4 percent. The decline thwarted a recovery in the stock that had made gains this week on expectations Vale would report a near record quarterly profit.

On a results conference call, company executives said supply and demand of the main ingredient for steel look balanced, helping prices stay at $70 reais per tonne or less. In February, Vale’s head of ferrous minerals Peter Poppinga expected prices hovering around $80 a tonne this year.

While both Poppinga and outgoing Chief Executive Officer Murilo Ferreira gave a rosy outlook for productivity metrics and extraction costs, some investors have questioned Vale’s over reliance on iron ore price behavior to boost profitability and cut debt.

“With a much lower iron ore price nowadays, and a weaker outlook for the second half, in our view, and no conviction on a rebound in base metal prices, we fear first-quarter numbers could have marked a peak for this year,” said Leonardo Correa, a senior mining analyst with Banco BTG Pactual.

For the rest of this article, click here: http://uk.reuters.com/article/vale-sa-results-idUKL1N1HZ0CA