Inter revises Vale’s share price target down after production and sales report

After Vale’s production and sales report points to a performance below expectations, the Inter revised its forecast for the mining company’s shares. According to a statement on Thursday (20), the target price for VALE3 is BRL 83, compared to BRL 100 previously, while Adr VALE US went from $20 to $17.

“We have revisited our model and assumptions in order to incorporate the company’s new expectations, as well as the more challenging scenario regarding steel and iron ore demand in China, as well as cost pressures that are expected to last for the year,” he said. .

Fears of a stronger-than-expected economic slowdown in China have had an effect on the steel and mining sector. The latest Chinese GDP data, referring to the second quarter, came below projections, pointing to growth of 0.4%.

“With expectations deteriorating and demand trending down, we could expect a stronger correction of iron ore prices, however, the restrictions on the supply side have contributed to the maintenance of prices at still high levels”, he added.

Vale reported lower-than-expected figures for its production in the first quarter of the year, still demonstrating difficulties, especially in the operation of base metals, both for nickel and copper, and of ferrous metals.

In the ferrous segment, iron ore production was 3.7% lower than Inter’s estimates, but 17% above production in the first quarter of the year.

Regarding base metals, Vale announced that it has faced “great challenges”, with strikes in Canada, longer-than-expected maintenance shutdowns and unforeseen ones. As a result, production was 24% lower than the quarterly comparison and 30% below Inter’s forecast.