How Is Vale’s Performance Compared to Other Iron Ore Miners?



Price performance of other iron ore miners

Vale S.A.’s (VALE) share price is down ~25% in 2015 through March 17. Iron ore prices have fallen by ~12%. Due to better-than-expected market results and other improvements, Rio Tinto (RIO) and BHP Billiton (BHP) are only down 1.1% and 0.5%, respectively, since the beginning of 2015.

BHP and Rio Tinto performed the best among all the iron ore miners. This was mainly because of the successful cost-out programs described in their FY14 results released in February 2015.

Pure plays and midcaps such as Fortescue Metals Group (FSUGY) and Cliffs Natural Resources (CLF) are down 29.0% and 34.7%, respectively.

Sentiment on Cliffs has been negative for quite some time due to very high debt burden amid falling iron ore prices.

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Vale’s downslide continues

Vale’s decline in stock price is continuing in 2015. Citigroup and other brokers have reduced their expectations for iron ore prices. This and worse-than-expected results have negatively impacted Vale’s stock price.

In one of our previous series on Vale, we saw why Vale is more sensitive to iron ore prices than BHP and RIO. To find out more, read Why is Vale more sensitive to iron ore prices than BHP and RIO?

Funds such as the iShares MSCI Global Metals & Mining Producers ETF (PICK) offer good ways for investors to gain exposure to the iron ore sector without choosing individual company stocks. BHP, RIO, and VALE form 17.8%, 11.1%, and 2.7% of PICK’s holdings, respectively.

To take a broader approach toward investing in this sector, you can look at the SPDR S&P Metals and Mining ETF (XME). Cliffs Natural Resources (CLF) forms 2.9% of XME’s holdings.


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