Vale: No Dividend In 2016

Vale's (NYSE: VALE) shares remain under serious pressure and have already lost more than 30% of their value since the beginning of the year. The speed of the decline is surprising even for a Vale skeptic like me. If someone showed me Vale's chart and did not tell the name of the company (supposing I did not see the chart before), I would have said that the market questions the long-term solvency of the company.
Iron ore prices won't recover this year
The consistent flood of negative news from China influences each commodity including iron ore. If we look at the CME futures data, we will see that expectations for iron ore prices decline as we look further into this year.

In my view, this has to deal not only with the overall skepticism about the commodity space in general, but with Vale's S11D start in particular. I have searched for any viable explanation on how the already weak market could absorb another 90 million tons of iron ore without an additional price weakness, but I haven't found any answer on this question.
Yes, the fact that S11D starts delivering iron ore this year is well-known and it could be already included in the current iron ore price. However, I think that the start up of the project could still wreak havoc in the iron ore market if it is combined with further weakness from the Chinese side.
Almost everything that Vale has done in the recent years led to the company's focus on iron ore and China. I've heavily... Read more

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