VALE - Vale S.A.

NYSE - NYSE Delayed Price. Currency in USD
9.76
+0.45 (+4.83%)
At close: 4:00PM EDT
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Slow Stochastic

Slow Stochastic

Performance Outlook
  • Short Term
    2W - 6W
  • Mid Term
    6W - 9M
  • Long Term
    9M+
Previous Close9.31
Open9.49
Bid9.78 x 42300
Ask9.89 x 1800
Day's Range9.39 - 9.80
52 Week Range6.49 - 14.19
Volume34,213,691
Avg. Volume32,377,438
Market Cap50.068B
Beta (5Y Monthly)0.87
PE Ratio (TTM)84.14
EPS (TTM)0.12
Earnings DateN/A
Forward Dividend & Yield0.69 (7.46%)
Ex-Dividend DateDec 27, 2019
1y Target Est12.32
Fair Value is the appropriate price for the shares of a company, based on its earnings and growth rate also interpreted as when P/E Ratio = Growth Rate. Estimated return represents the projected annual return you might expect after purchasing shares in the company and holding them over the default time horizon of 5 years, based on the EPS growth rate that we have projected.
Fair Value
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33% Est. Return
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  • Reuters

    In northern Brazil, iron ore keeps flowing as Vale miners battle coronavirus

    In late April, Evaldo Fidelis, a 35-year-old tractor operator at Vale SA's massive iron ore mine in northern Brazil, came down with a dry cough. Fidelis, a labor organizer who tested positive for the virus 10 days later, is far from alone. An isolated area in Brazil's Para state centered around three Vale-owned iron ore mines - S11D, Serra Norte and Serra Leste - is home to a coronavirus outbreak that has claimed 64 lives in the nearby town of Parauapebas alone, municipal data show.

  • The Zacks Industry Rank Highlights: Fortescue Metals and Vale
    Zacks

    The Zacks Industry Rank Highlights: Fortescue Metals and Vale

    The Zacks Industry Rank Highlights: Fortescue Metals and Vale

  • Australia’s New Century In Talks To Buy Vale’s Nickel, Cobalt Mine
    SmarterAnalyst

    Australia’s New Century In Talks To Buy Vale’s Nickel, Cobalt Mine

    Australia’s New Century Resources Ltd. is in talks with Brazilian miner Vale SA (VALE) for the acquisition of its nickel and cobalt mine operations on the Pacific island of New Caledonia.The zinc miner has entered into a 60-day exclusivity period with Vale Canada Limited, a subsidiary of Vale S.A., to complete due diligence and negotiate the acquisition of 95% of the issued shares in Vale Nouvelle Calédonie S.A.S. (VNC), which owns and operates the Goro nickel & cobalt mine in New Caledonia. The mine also has a processing plant and a port facility.Financial terms of the talks weren’t disclosed. However, Vale informed investors that with the announcement, the investment held at VNC will be recorded at the fair value and classified as an "asset held for sale" in its consolidated financial statements, leading to an additional impairment loss of about $400 million to be recognized in the second quarter income statement.If the talks progress to a deal, the purchase would turn New Century Resources into a major supplier of nickel and non-DRC sourced cobalt for the electric vehicle industry, the zinc miner said.Furthermore, IGO Limited, a major shareholder in New Century, is supportive of the acquisition opportunity, New Century said in the statement.Shares in Vale have seen a nice advance in the past two months gaining 36%. However, the stock is still down some 33% year-to-date.BMO Capital analyst Edward Sterck last month raised Vale’s stock rating to Buy from Hold, while lowering the price target to $9.50 from $12, citing the miner’s low-cost iron ore exposure offering a "relative safe-haven" for investors during the COVID-19 market volatility.The analyst added that he sees the company’s Brazilian production more at risk of slowdowns than absolute shutdowns.Turning now to the rest of Wall Street analysts, a bullish outlook prevails. Vale scores 9 Buy ratings adding up to a Strong Buy consensus. The $11.50 average price target indicates 28% upside potential in the shares in the next 12 months. (See Vale stock analysis on TipRanks).Related News: Regeneron To Repurchase $5 Billion Stake From Sanofi   Weight Watchers Fires Thousands Over Zoom Facebook Workplace Hits 5 Million Paid Users As Remote Work Demand Rises More recent articles from Smarter Analyst: * Elon Musk Reaps Payout Worth $775M, As Analyst Admits Tesla Is ‘Turning A Corner’ * Costco Pulls Back On Earnings; Top Analyst Sees Buying Opportunity * Cisco To Buy ThousandEyes For Reported $1B; Top Analyst Sees Strong Synergy Potential * Salesforce Sinks 3.5% After-Hours As Guidance Slashed

  • Reuters

    Steinmetz's BSGR seeks to reopen $1.25 bln Guinea ruling

    Billionaire Beny Steinmetz's BSG Resources Ltd (BSGR) is seeking to reopen an arbitration case that ordered it to pay $1.25 billion to Brazilian minder Vale SA over an abandoned mining joint venture in Guinea. BSGR has filed documents, seen by Reuters, with a U.S. court which it said shows that Vale was aware of potential bribery or "red flags" when the companies partnered to develop Simandou, one of the world's biggest iron ore deposits containing billions of tonnes of the steelmaking ingredient. The companies are locked in a long-running legal dispute over the joint venture, which was created in 2010 but has since been abandoned.

  • Bloomberg

    Mining Billionaire Gets Help From Ex-Spies in Bitter Legal Fight

    (Bloomberg) -- Black Cube, the private intelligence agency run by former Israeli spies, spent months setting up companies around the world. Offices, websites and employees were painstakingly put in place -- all part of a sting targeting former executives at Brazilian mining giant Vale SA.The Black Cube operation, made public in a court filing Thursday and described by people familiar with it, represents the latest escalation in a bitter fight between Vale and mining billionaire Beny Steinmetz.What started in Guinea as a partnership in one of the world’s richest mineral deposits has devolved into a globe-spanning dispute that sheds light on how fortunes can be made and lost in the world of African mining.As surging Chinese demand for raw materials spurred a race for assets in Africa, Steinmetz acquired the rights to an iron-ore project known as Simandou in 2008. Vale bought a 51% stake about a year later. Then a new president in Guinea seized the asset back after a corruption probe -- and Vale is pursuing Steinmetz for compensation.While Steinmetz has always denied wrongdoing, he says in the filing that Vale suspected all along that his original acquisition of the assets could have been problematic. Vale has said in court documents it didn’t know.Steinmetz says the sting operation -- detailed in court filings that include a declaration from one of Black Cube’s founders and transcripts of conversations with former Vale executives -- showed the Brazilian company was suspicious before it signed the deal. That undermines Vale’s claim to compensation, he argues.A spokesman for Vale, which was awarded $2 billion in a London arbitration last year that it is still trying to collect, declined to comment.“This report just confirmed what we were saying from day one. Vale knew everything, there was no surprise for them. Now we have the full proof of that. I was happy to see that, because until now we were fighting and no one believed us,” Steinmetz said in an interview with Bloomberg News this week. For almost a decade, Steinmetz has faced legal challenges and probes over how he obtained the rights to the deposit in Guinea. The Guinean government withdrew charges of corruption against him after a seven-year dispute. He denies any wrongdoing.Last year the London Court of International Arbitration found that Steinmetz’s BSG Resources Ltd. made fraudulent representations to Vale when it sold the mine stake. Steinmetz’s appeal was thrown out.The court ordered BSGR to pay the Brazilian company $2 billion for its losses in the joint venture. To collect the cash it is owed under that order, Vale has sought to freeze Steinmetz’s assets and is asking a U.S. judge to help it secure evidence about investments he and others allegedly made in New York real estate.‘Nose Closed’In a conversation with Black Cube’s undercover operatives -- according to a transcript filed with the court documents -- former Vale executive Jose Carlos Martins said he’d had suspicions about the deal. While he recommended Vale go ahead with the purchase, “I’m proposing it with my nose closed because I smell something wrong,” he said, according to the transcript.Martins, who spent almost a decade running the company’s iron ore business, didn’t respond to requests for comment.In the transcript, Martins compared the deal to a beautiful woman with a sexually-transmitted disease.“You bring her to your hotel room, she’s naked, marvelous, and then she says: ‘A little problem, maybe I am with AIDS’, okay? It’s a problem.”Black Cube, which says on its website it hires veterans of the Israeli intelligence community, had a team of more than 20 agents working on the investigation, according to people familiar with the situation. It specializes in targeting human sources for information, often in cases where little or no documentary evidence can be found.The company mapped out all those it believed could have information on the case and built psychological models of its targets, before deciding on the best cover stories and approaches, the people said. The operative who spoke to Martins presented himself as a partner in an investment consultancy, and all recordings were legal, Black Cube says in the court papers.‘Don’t Tell Me’Martins told the Vale board about entering the deal “closing our eyes,” he said to the operative, according to the transcript. “One of the board members said, ‘Don’t tell me, I don’t want to know at all.’”At the beginning of the last decade, Simandou was seen as one of the most strategically important assets in the mining world. Its development was a threat to the three dominant iron ore miners, Vale, BHP Group and Rio Tinto Group, at a time of insatiable Chinese demand for the steelmaking ingredient. It was in that context that Vale wanted the asset.“Everybody knows that there was something wrong,” Martins told the undercover agent, according to the filing. “Myself, the CEO. But it was so important not to let this buying to get the competition hands.”Black Cube also targeted another former Vale executive, Alex Monteiro. According to the transcript, he told operatives: “All the diligence we did was fine, but still, there was that smell of something that could have been done wrongly.” When approached for comment by Bloomberg on Thursday, Monteiro said the due diligence didn’t produce any concerns.“Based on an in-depth due diligence we did, there was no bad smell,” he said by email.Dying PresidentSteinmetz, 64, has a long history in difficult environments across the globe after having been originally sent out by his family to secure supplies of rough diamonds. He developed a diamond mine in Sierra Leone before setting his sights on Simandou in neighboring Guinea.Ailing President Lansana Conte stripped Rio Tinto of its rights to half of the asset, which the Anglo-Australian miner hadn’t developed in a decade of control. The rights lost by Rio were transferred to Steinmetz weeks before the president died in 2008. Then BSGR sold half the asset to Vale.After Alpha Conde was elected in 2010, he announced a review and clean-up of the mining industry, Guinea’s main source of income. Billionaire George Soros and former U.K. Prime Minister Tony Blair advised on and funded Conde’s initiative. A dossier of alleged corruption became the basis for BSGR’s loss of rights. BSGR denied it paid any bribes.In 2014, a Frenchman with ties to Steinmetz and BSG Resources was sentenced to two years in prison for interfering with a U.S. probe of bribery in connection with mining rights in Simandou. Steinmetz is also facing corruption charges in Switzerland over the mining asset, which he denies.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Reuters

    EMERGING MARKETS-Rise in commodity prices lift Latam assets as recovery hopes grow

    * Mexican peso hits highest since mid-April * Colombian peso at 10-week high, Chilean peso hits 11-week high * Stocks rally on hopes of strong first half in 2021 * Negotiators with creditors may extend beyond May 22 - Argentina (Adds comments, updates prices) By Shreyashi Sanyal and Susan Mathew May 20 (Reuters) - Latin American stocks and currencies were lifted by a rise in commodity prices on Wednesday, with the Mexican peso hitting a five-week high, as markets looked to a strong post-pandemic recovery. Brazilian airline Azul shot up 13% on plans to increase daily flights by 46% in June compared with May. Other major gainers were oil giant Petrobras and iron ore miner Vale.

  • Reuters

    EMERGING MARKETS-Most Latam FX, stocks rally on hopes of strong recovery

    * Mexican peso hits highest since mid-April * Colombian peso at 10-week high, Chilean peso hits 11-week high * Stocks rally on hopes of strong first half in 2021 * Negotiators with creditors may extend beyond May 22 - Argentina By Susan Mathew May 20 (Reuters) - A rally in commodity prices lifted Latin American stocks and currencies on Wednesday, with Mexico's peso hitting a five-week high, as markets looked to a strong post-pandemic recovery. In line with a rally on Wall Street, most regional bourses traded between 0.% and 1.7% higher, although Mexican stocks extended losses after posting their worst session in almost two months on Tuesday as new rules for the electricity sector increased tensions between the private sector and government.

  • Reuters

    EMERGING MARKETS-Latam assets surge as commodity prices rally

    * Brazilian real leads gains among Latam peers * Mexican peso hits more than four-week high * Argentine peso touches fresh low against dollar (Adds comments, updates prices) By Shreyashi Sanyal and Susan Mathew May 18 (Reuters) - Latin American assets roared higher on Monday, with Brazil's real jumping as commodity prices surged on hopes of economic recovery as countries eased pandemic-induced lockdowns. Encouraging data from a COVID-19 vaccine trial by U.S. drugmaker Moderna added to the optimism, bolstering Wall Street's rally. Brazil's real added 2.2%, while currencies of other oil exporters Mexico and Colombia firmed between 1% and 1.7%, with the Mexican peso touching a more than four-week high.

  • Reuters

    Brazil maritime trade surplus widens as ports remain open, farm exports strong -ATP

    Brazil recorded a $19.7 billion maritime trade surplus in the first four months of the year as imports by value fell as the real currency weakened and exports of agriculture goods remained strong, a port operators group said on Monday. The surplus is 14.56% wider than in the same period of 2019 despite the crisis caused by the novel coronavirus, which has disrupted transport systems worldwide, said ATP, which represents Brazilian private-sector terminal operators including miner Vale and grain merchant Bunge. The widened surplus reflects the fact that Brazilian ports have operated regularly amid the pandemic, ATP said in a statement.

  • Reuters

    EMERGING MARKETS-Latam stocks, FX surge as commodity prices rally

    Encouraging data from a COVID-19 vaccine trial by U.S. drugmaker Moderna added to the optimism, bolstering Wall Street's rally. Despite worrying rises in the number of new cases in emerging markets, especially Brazil, and simmering U.S.-China trade tensions, an index of Latam stocks jumped 4.3%. Currencies of oil exporters Brazil, Mexico and Colombia firmed between 1.3% and 1.5%, with the Mexican peso touching a more than four-week high.

  • Reuters

    EMERGING MARKETS-Mexican peso up on easing virus curbs, Brazil's real off on political flux

    * Mexico to open up some car factories from Monday * Brazilian real falls for third straight day * Chilean central bank says financial system not hard hit (Adds comments, updates prices throughout) By Shreyashi Sanyal May 13 (Reuters) - Mexico's peso rose on Wednesday, as the country unveiled plans to reopen some portions of its economy from May 18, while intensifying political uncertainty in Brazil weighed on its currency. Most Latam bourses followed Wall Street into the red after U.S. Federal Reserve Chairman Jerome Powell warned of a prolonged recession due to the pandemic. The dollar rose after Powell dispelled speculation about negative interest rates.

  • Bloomberg

    Brazil Ore, Power Giants Excluded From Norway’s Wealth Fund

    (Bloomberg) -- Iconic Brazilian companies Vale SA and Eletrobras SA were removed from the world’s largest sovereign wealth fund due to environmental and human rights concerns.Norges Bank Investment Management said in a statement it’s excluded iron-ore giant Vale from Norway’s $1 trillion pension fund after repeated dam breaches in Brazil killed hundreds of people and caused environmental damage. Eletrobras was withdrawn because of the “unacceptable risk” that the country’s largest utility contributes to serious or systematic human rights violations.Norges’s move deals a blow to Vale, which has taken steps to improve its image after a dam collapse early last year killed 270 people. The Rio de Janeiro-based mining company replaced its top manager, committed to decommissioning riskier dams, and built a treatment plant to clean up polluted water.For Eletrobras, it’s also a reminder of the problems associated with the Belo Monte plant, where construction in the Amazon forest was marked by fierce opposition from environmental groups and a corruption scandal. Norges’s Council on Ethics said the project led to “increased pressure on indigenous lands, the disintegration of indigenous peoples’ social structures and the deterioration of their livelihoods,” with about 20,000 people displaced by the dam. The council also said the company has been involved in other projects that have been criticized for human rights violations.Eletrobras, controlled by the Brazilian government, said in a statement that it has taken “important strategic steps” to strengthen its commitment to human rights practices including closely monitoring subsidiaries like Belo Monte’s operator.Vale declined to comment.Norway’s wealth fund owned $375 million in Vale stock at the end of 2019, according to the latest figures available on the website of Norges Bank Investment Management. It also held $53 million in shares and $21 million in bonds of Eletrobras.Eletrobras fell 1.1% at 3:43 p.m. in Sao Paulo, extending this year’s decline to 46%. Vale rose 3%, reducing 2020’s losses to 9%.Other companies excluded from the fund include Canadian Natural Resources Ltd., Cenovus Energy Inc., Suncor Energy Inc. and Imperial Oil Ltd. due to emissions. ElSewedy Electric Co was also excluded because of its participation in the development of a hydropower project in Tanzania.(Adds Eletrobras comment in fifth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Reuters

    EMERGING MARKETS-Mexican peso leads gains; political uncertainty pressure Brazil's real

    Most Latam bourses followed Wall Street into the red after U.S. Federal Reserve Chairman Jerome Powell warned of a prolonged recession due to the pandemic. The dollar was flat, cutting losses after Powell dispelled speculation about negative interest rates. Brazil's real underperformed as new evidence in a probe revealed that President Jair Bolsonaro planned to change the federal police chief in Rio de Janeiro to protect his family from investigation.

  • Norway wealth fund blacklists Glencore, other commodity giants over coal
    Reuters

    Norway wealth fund blacklists Glencore, other commodity giants over coal

    Norway's $1 trillion wealth fund is excluding some of the world's biggest commodities firms from its portfolio for their use and production of coal, including Glencore and Anglo American. Underlining the growing role of climate considerations for long-term investors, the fund is also excluding German utility RWE, South African petrochemicals firm Sasol and Australian company AGL Energy over their use of coal. The fund, set up in 1996 to save Norway's oil revenues for future generations, now holds about 1.5% of globally listed shares and its decisions are often followed by other investors.

  • Reuters

    World's biggest wealth fund blacklists 4 Canadian firms for greenhouse emissions

    The Norwegian central bank on Wednesday excluded four Canadian oil and gas companies from its $1-trillion wealth fund, the world's largest, for producing too much greenhouse gas emissions, its first use of carbon emissions as a criterion to blacklist firms. Canadian Natural Resources Ltd, Cenovus Energy Inc , Suncor Energy Inc, and Imperial Oil Ltd were excluded from the fund due to "unacceptable greenhouse gas emissions", Norges Bank said in a statement https://www.norges-bank.no/en/news-events/news-publications/News-items/2020/2020-05-13-spu. The decision was based on recommendations from the Council on Ethics, the fund's ethics watchdog, because of the companies' carbon emissions from production of oil to oil sands, the central bank said.

  • GlobeNewswire

    Two Northern Ontario Organizations Amongst Winners of COVID-19 Challenge

    On April 3, the Vale COVID-19 challenge was launched in Canada to help propel innovative COVID-19 solutions developed by companies, startups, institutions, universities or professionals into the marketplace by offering financial support of up to USD $1M. A total of nearly 1,800 solutions were submitted globally, of which over 300 came from within Canada.

  • Reuters

    EMERGING MARKETS-Brazil's real sinks to new lows after rate cut; broader Latam rises

    * Real breaches 5.8 to the dollar * Most Latam stocks rise * Deutsche Bank sees some strength in EM (Adds details, updates prices) By Susan Mathew and Ambar Warrick May 7 (Reuters) - Brazil's real plumbed new lows on Thursday after the country's central bank made a bigger-than-expected cut to its key interest rate, while most other Latin American currencies made healthy gains against the dollar. The reading also pointed to some resilience in global demand, aiding commodity prices. Most regional shares rose between 1% and 4%, while Brazil's Bovespa fell on the prospect of strict lockdowns across most of the country to curb the spread of the coronavirus.

  • Reuters

    EMERGING MARKETS-Deeper c.bank rate cut pushes Brazil's real to new low; broader Latam rises

    As oil prices jumped, currencies of crude producers Mexico and Colombia rose almost 1%, while rallying copper prices lifted exporter Chile's peso. Most regional shares rose between 0.8% and 1.7%, in line with gains in Wall Street indexes, but Brazil's Bovespa fell. Brazil's currency slid to 5.857 as the central bank cut rates by 75 basis points, 25 basis points more than a consensus estimate, to yet another record low of 3%.

  • Vale SA (VALE): Were Hedge Funds Right About This Stock?
    Insider Monkey

    Vale SA (VALE): Were Hedge Funds Right About This Stock?

    We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy […]

  • Vale S.A. (VALE) Q1 2020 Earnings Call Transcript
    Motley Fool

    Vale S.A. (VALE) Q1 2020 Earnings Call Transcript

    VALE earnings call for the period ending March 31, 2020.

  • Reuters

    World's mine workers resist quick restart amid coronavirus

    As mining heavyweights South Africa and Peru move to lift coronavirus lockdowns, workers in deep mines are resisting going back to work without adequate protective gear and information about cases at sites, with one major union filing legal action against restart plans. The workers fear being literal canaries in the coal mine in facilities where social distancing is nearly impossible and warn that companies are not divulging coronavirus cases, putting them at risk. Peru, which hopes to end its own lockdown on May 10, is the world's No. 2 copper producer and No. 6 gold producer.

  • Why Vale (VALE) Might Surprise This Earnings Season
    Zacks

    Why Vale (VALE) Might Surprise This Earnings Season

    Vale (VALE) is seeing favorable earnings estimate revision activity and has a positive Zacks Earnings ESP heading into earnings season.

  • Will Dry Bulk Remain The 'Wile E. Coyote' Of Ocean Shipping?
    Benzinga

    Will Dry Bulk Remain The 'Wile E. Coyote' Of Ocean Shipping?

    Dry bulk has been the "Wile E. Coyote" of ocean shipping for the past decade – forever chasing after profits only to lunge at empty air and repeatedly fall straight off a cliff.Rates for Capesizes, the workhorse bulkers with capacity of around 180,000 deadweight tons, are now enjoying their seasonal upturn, but even so, they're still below breakeven.Will this be yet another lost year for dry bulk shipping, and for top U.S.-listed Capesize owners Star Bulk Carriers Corp. (NASDAQ: SBLK), Golden Ocean Group Limited (NASDAQ: GOGL) and Genco Shipping & Trading Limited (NYSE: GNK)? Evercore ISI analyst Jon Chappell is not optimistic on the sector's prospects. "Dry bulk challenges will just not abate," he said in a client note on Monday.Dry bulk's lost decadePrior to 2009, vast fortunes were made in dry bulk, the largest cargo business in the world measured by volume and the freight segment with the most active derivatives market.According to Chappell, "Since the end of the global financial crisis, a myriad of issues ... have derailed the promise of another sustainable cyclical upturn, resulting in year after year of losses and ‘cheap' stocks. Dry bulk shipping cannot seem to catch a break." Brazilian iron-ore production estimates reduced. Photo credit: ValeThe stage was set for recovery in 2019. Then a dam in Brazil holding back iron-ore mining residue collapsed, killing over 270 people. The mine closures that followed slashed Chinese imports from Brazilian iron-ore miner Vale S.A. (NYSE: VALE), crippling Capesize spot rates.The stage was then set for recovery in 2020. Vale's mines were expected to come back online and Capesize owners were predicted to profit from exhaust-gas scrubbers. The scrubbers would allow owners to keep burning cheaper high-sulfur fuel and not switch to the expensive low-sulfur fuel required by the new IMO 2020 regulations.Then came the coronavirus. The ensuing global recession threatens steel demand, the driver of the seaborne iron-ore trade. The collapse in oil prices erased the spread between high- and low-sulfur marine fuel, destroying the value of scrubbers. Meanwhile, Vale still isn't back to full speed and the pandemic could create further delays in Brazil.Vale production woes persistIn a production report issued after market close on Friday, which one dry bulk participant dubbed "terrible," Vale slashed its full-year iron-ore production outlook from 340 million-355 million tons to 310 million-330 million tons – a midpoint reduction of 27.5 million tons or 8%.Vale warned that COVID-19 could have a "meaningful" impact on its mining productivity and could delay the resumption of production at mines closed by the 2019 dam accident by "delaying inspections, assessments and authorization processes."On a positive note, Vale's first-quarter production came in at 59.6 million tons (9% below the forecast midpoint), meaning that production must accelerate to an average of 83.5 million tons per quarter if Vale is to hit the bottom end of its reduced full-year range."As we anticipated by looking at trade flows, Vale greatly missed its own guidance for the first quarter and naturally cut its full-year guidance," said John Kartsonas, founder of Breakwave Advisors, the creator of the Breakwave Dry Bulk Shipping ETF (NYSE: BDRY).Kartsonas told FreightWaves, "The silver lining is that if [Vale] manages to sell as much as it says for the rest of the year – and that's a big if – there will be around 25 million tons of incremental iron-ore demand versus last year and the highest iron-ore trade ever out of Brazil [during] the second half of 2020. That bodes well for Capesize rates."Rate outlook and driversFrode Mørkedal, managing director of research at Clarksons Platou Securities, believes a "ramp up in [iron-ore] shipments for the remainder of the year, coupled with increasing stimulus spending and seasonal improvements in activity, could support a strong freight rate recovery." Bulkers loading Brazilian iron ore. Photo credit: ValeBreakwave Advisors said in its latest outlook, "We anticipate a considerable ramp up in volumes [from Brazil] for the rest of the year ... there is ample room to see a repeat of last year's rally when rates peaked at almost $40,000 per day in September."U.K.-based consultancy Marine Strategies International (MSI) struck a more cautious note in its new outlook released on Monday. It estimated that average non-scrubber spot rates would rise to $12,400 per day by June and $13,100 per day by October.According to MSI, "Indications of a bounce-back in steel demand in China – including increased sales of construction equipment, a drawdown of steel stockpiles and, surprisingly, a sharp uptick in steel imports – may provide a glimmer of hope. But the recent resurgence of COVID-19 cases, such as the outbreak in Harbin [China], underpins our more cautious expectations."Chappell is more bearish. Last week, he cut his full-year 2020 Capesize rate forecast to just $11,000 per day, from $15,000 per day previously. He reduced his 2021 forecast to $14,500 per day, down from $19,000 per day.Can dry bulk stocks recover?In mid-day trading on Monday, shares of Star Bulk were down 10%, Genco 8% and Golden Ocean 4%. In each case, stocks were back to levels seen in 2016.Chappell doesn't foresee the dry bulk companies he covers booking full-year profits until 2022 at the earliest. "Cheap doesn't always mean attractive," he said, noting that the question for investors is: "Why do I need to own these stocks?" and that his answer to investors is: "You don't.""At a time of maximum macro uncertainty, high-beta, small-cap commodity stocks are about as far from a ‘safe haven' as there is," he added.Deutsche Bank transportation analyst Amit Mehrotra commented in a client note last week, "There's nothing much to say here except it's bad. Clearly dry bulk stocks won't work until spot cash flows are accruing to equity holders – and we're a far way off from that happening."Spot rates and fuel spreadsTo get a closer look at what's going in with Cape rates, FreightWaves has developed a series of charts covering year-to-date Cape performance based on data from S&P Global Platts.Last year, Platts began publishing the CapeT4 Index; it produces dual indices, one for Capesizes using exhaust-gas scrubbers burning traditional 3.5% sulfur heavy fuel oil (HFO) and one for non-scrubber Capes burning 0.5% sulfur fuel known as very low sulfur fuel oil (VLSFO).Rates assessed on a dollars-per-day time-charter equivalent (TCE) basis are calculated net of fuel, meaning that scrubber ships burning cheaper HFO post higher TCE rates. Jefferies analyst Randy Giveans told FreightWaves that 22% of Capesizes currently on the water are equipped with scrubbers.What's striking about the Platts index data is that scrubbers were designed to save ship owners money – and they have – but the year-to-date (YTD) rate trend for scrubber ships is down and the trend for non-scrubber ships is up.Non-scrubber Capesize rates were assessed on Friday at $9,809 per day by the Platts T4 Index, double the rate at the beginning of the year and quadruple the YTD low set in January. In contrast, TCE rates of scrubber ships have fallen 29% YTD, to $11,680 per on Friday, because the discount of HFO to VLSFO has collapsed (and thus, the savings and TCE benefit have reduced) at a much faster pace than base freight rates have risen.The downward rate trend for scrubber Capes has reversed in recent weeks for two reasons. First, the HFO-VLSFO spread is about as low as it can get, so there's less room for a spread decline to reduce scrubber Cape TCE rates. Second, base rates are rising off first-quarter seasonal lows, supporting both scrubber and non-scrubber Capes.Brazil vs. Australia exportsThe Platts CapeT4 is primarily driven by two roundtrip routes: Australia-China and Brazil-China.In the Australia-China market, the scrubber advantage has almost completely vanished this month, with non-scrubber Cape rates assessed at $8,199 per day on Friday and scrubber Capes at $8,712 per day. Scrubber Cape TCE rates in this geographical segment are down 54% YTD and non-scrubber rates are up 47%.In the Brazil-China market, rates are higher than out of Australia and while scrubber savings have slimmed, they haven't disappeared to quite the extent they have in Australia. Platts assessed non-scrubber Cape rates in this market at $11,360 per day on Friday and Cape rates at $14,493 per day. Scrubber rates in this segment are down 22% YTD and non-scrubber rates are up 141%.Scrubber promises unfulfilledThe closing of the HFO-VLSFO spread means it will take much longer for companies that paid huge sums for fleetwide scrubber installations to recoup their capital costs, let alone earn a profit from this strategy.Star Bulk, for example, is spending $209 million to install scrubbers on 114 ships, equating to an average of $1.8 million per scrubber. On a back-of-the-envelope basis, assuming a Capesize uses a scrubber 300 days a year, the current daily savings imply the investment won't break even for over three years.And the actual cost is even higher still when including the opportunity cost – earnings lost during the installation process, including voyages to and from the yard.Basil Karatzas, founder of Karatzas Marine Advisors & Co., told FreightWaves, "There is a Greek shipowner who put all five of his Capes in drydock to install scrubbers last summer. Cape rates spiked and he basically made no money on that spike because he was out of position. His ships were in the yard. He thought he was doing the right thing by installing scrubbers, but now, the spread is minimal, so not only did he miss the spike, but he isn't making any money out of the scrubbers." Click for more FreightWaves/American Shipper articles by Greg MillerPhoto credit: ValeSee more from Benzinga * Daimler Recalls Trucks Because Of Rear Visibility Issue * Executive Director Of The Airforwarders Association Brandon Fried Discusses Air Freight And COVID-19 (With Video) * Volumes Hit A Floor Over The Weekend – FreightWaves NOW(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  • Vale Trims 2020 Production Guidance on Coronavirus Impact
    Zacks

    Vale Trims 2020 Production Guidance on Coronavirus Impact

    Vale (VALE) cut production forecast of iron ore fines and pellets, copper and nickel in 2020, while withdrawing the same for coal, citing coronavirus induced uncertainty.