Wolfe cuts Vale to Underperform on ‘structural decline’ of iron ore

Wolfe Research downgraded Vale to Underperform from Peer Perform with a $10 price target The firm now sees structurally weaker Chinese demand and new low-cost capacity from Simandou. Iron ore demand is in “structural decline,” the analyst tells investors in a research note. Wolfe says its conviction of shrinking Chinese steel consumption is supported by new government initiatives to support home prices that mandate fewer homes built, which will hurt rebar demand over the long term. It cut iron ore forecasts and downgraded Vale to Underperform.