To our PGE's,chromite,and copper. Last week i read nickel prices were at a 2 year low and demand was decreasing.Anyway this was a good read to substantiate.
Vale Falls as Citi Says Nickel, Rain May Damp Profit (Update2)
By James Attwood
May 27 (Bloomberg) -- Cia. Vale do Rio Doce, the world's biggest iron-ore producer, slumped to the lowest in three weeks in New York trading after Citigroup Inc. said falling nickel prices and heavy rains in Brazil may hurt earnings.
Vale's American depositary receipts declined 3.3 percent to $39.64, the lowest since May 9. The shares declined for a sixth day, the longest losing streak since August 2006. Vale's Brazilian shares fell 2 percent to 54.69 reais.
The Rio de Janeiro-based company's Brazilian iron-ore operations are suffering from heavy rains, freight costs are rising and China is trying to run down iron-ore stocks at its ports, all as nickel prices tumble, analyst Alexander Hacking wrote in a note to clients today.
``Weather issues are normal in mining, but lower production and low nickel price could lead to cuts in short-term consensus earnings per share,'' Hacking wrote.
Nickel extended a decline into its fifth week in London as near record oil costs threaten to slow world economic growth, further weakening demand for the metal used to make stainless steel. Nickel for delivery in three months dropped 3.3 percent to $23,300 on the London Metal Exchange.
Nickel's decline may hurt mining companies such as Vale, which gets about 36 percent of its profit from the metal, London- based MF Global Ltd. analyst Tobias Woerner wrote in a report May 23.
``Vale's shares could see continued short-term weakness,'' Hacking wrote. The San Francisco-based analyst kept a ``buy'' rating on the stock.
Separately, Vale said in a statement yesterday that it plans to sell all the shares it owns in Brazilian steelmaker Usinas Siderurgicas de Minas Gerais SA. The decision is a ``very negative sign'' for Usiminas, Banco Santander analysts including Felipe Reis wrote in a note to clients today.
To contact the reporter on this story: James Attwood in Santiago at jattwood3@bloomberg.net
Last Updated: May 27, 2008 16
