Awesome Presentation On Why Chinese Commodity Demand Will Continue To Go NUTS

vale commodities presentation

A Brazilian commodities giant with mines for major China-driven minerals is firing on all fronts and doesn’t plan to quit anytime soon.

Vale (VALE) reported strong Q1 earnings on the back of a booming market for iron ore, nickel, and other minerals. The company also reported relatively strong earnings during the recession thanks to their prescient belief that previous China fears were overblown.

It may be fashionable and seem prudent to predict a hard China crash, but Vale doesn’t think it’s profitable.

For Vale, Chinese iron ore demand surged in 2009

The Chinese market exploded as VALE replaced India.

Despite global turmoil, VALE had a relatively good year in 2009 thanks to China

As non-Chinese demand recovered, VALE saw significant improvement in Q12010

Iron ore is rising to record highs. This chart shows how the seaborne market is essentially all China-driven

Minerals and metals are tracking the global manufacturing boom

Steel production has returned to peak levels

Growing demand is pushing ore prices to new highs

Stainless steel is coming back

Nickel demand is rising

As for the bubble question, VALE believes Chinese fundamentals are strong and demand will continue, despite regulatory efforts or potential economic shocks.

The other key growth market is VALE's home country -- particularly for fertiliser

VALE has mines ready to cash in on a potash & phosphate boom in Brazil

Importantly, keep in mind they are putting money behind their optimistic outlook.

They've been investing billions for years, due to their high conviction in the prospects for their commodities.

So it may be fashionable to predict a sharp China collapse, but Vale doesn't think it's profitable.

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