We previously covered Vale S.A. (NYSE:VALE) in July 2023, discussing its mixed prospects attributed to the lower-than-expected contracted iron ore rates from China and impacted valuation for its Energy Transition Metal segment.
However, we had chosen to opportunistically rerated the stock as a Buy then, attributed to the improved risk/reward ratio after the much-needed pullback, expanded forward dividend yield, and strategic electrification plans.
In this article, we maintain our buy rating for VALE, attributed to the recovering iron ore spot prices as China increases its imports and produce more steel on a YoY basis.
Most importantly, its ongoing premiumization efforts have been working well, with the higher quality iron ores contributing to its expanded realized prices and bottom lines.
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