Vale Beats BHP, Rio as Top Stock Pick on China Iron-Ore Demand
By Carlos Caminada and Diana Kinch
Sept. 2 (Bloomberg) -- Cia. Vale do Rio Doce fell 26 percent this year in Sao Paulo, heading for the first annual decline since 2000. Now analysts say the world's largest iron- ore producer is poised for its best performance in a decade.
Vale may double in the next year, three times the expected gains for the world's biggest mining companies, BHP Billiton Ltd. and Rio Tinto Plc, according to the median of six analysts' forecasts compiled by Bloomberg.
While Deutsche Bank AG, Credit Suisse Group AG and Goldman Sachs Group Inc. predict iron-ore prices will rally 20 percent in 2009, Rio de Janeiro-based Vale will benefit more than its competitors as demand from Chinese steelmakers rises and freight rates fall. BHP and Rio won bigger price increases from China this year than Vale because they ship most of their ore from Australia, not Brazil.
``Vale is set to outperform its peers,'' Credit Suisse's Roger Downey, the top-ranked metals and mining analyst in Latin America last year by Institutional Investor magazine, said in a telephone interview from Sao Paulo. ``Iron ore is the metal that's most likely to surprise the market.''
Vale will jump 98 percent to 74.17 reais ($45.15) in 12 months from its closing price of 37.50 reais yesterday on the Sao Paulo stock exchange, according to the median of six forecasts compiled by Bloomberg. The company's shares rose more than 80 percent on an annual basis three times -- last year, in 2002 and in 1999, when they surged 222 percent.
Rio Tinto's shares will increase 34 percent, and BHP will rally 29 percent, estimates show. Rio Tinto dropped 5.8 percent in London trading this year, while BHP advanced 2.3 percent in Sydney. |
