Vale: China’s Construction Collapse Signals Multi-Decade Peak In Iron Ore Demand


  • As expected, Vale has declined by ~21% since I last covered it as China’s demand falters and production costs rise.
  • By 2026, I expect we’ll see even lower iron demand from China as its property bubble collapse accelerates despite government stimulus efforts.
  • Chinese demand accounts for most of Vale’s sales and is the primary driver of iron ore prices, implying a potentially permanent peak in China’s iron import demand.
  • As the Middle East and Asia governments pursue “make work” construction projects, I think there is evidence that global iron ore demand may never recover to 2010s levels within the foreseeable decades.
  • Vale’s copper business growth is not strong enough to offset its iron ore risks, potentially leaving the company mildly overvalued.

A suspended construction site in China, a bankrupt project

redtea/E+ via Getty Images

At the end of 2022, I published a bearish outlook on the mining giant Vale S.A. (NYSE:VALE) in “Vale: Margins Under Pressure As Energy Shortage Increases Costs And Impairs Demand.” At that time, I

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