1. Report Industry Investment Rating No relevant information provided. 2. Core Viewpoints of the Report - The supply of iron ore in China decreased while demand increased in the first half of 2025. The consumption of iron ore reached a record high, supporting the high valuation of iron ore among the black commodities. [2][93] - In the second half of the year, the global iron ore supply is expected to increase slightly, with a total increment of about 13 million tons from the Big Four mines and non - Australia and Brazil regions. The supply pressure is not significant. [2][93] - The demand for construction steel in China is expected to continue to decline, while the demand for manufacturing steel is expected to remain resilient. Overseas demand, especially from India, is expected to contribute more than 10 million tons of incremental demand throughout the year. [2][93] - The trading logic in the second half of the year mainly involves the Fed's interest - rate cuts and global tariff policies. The fundamentals of iron ore supply and demand will remain neutral, and the Platts iron ore price will fluctuate widely between $90 - $105. [3][94] - The trading strategy suggests speculatively buying at the bottom of the iron ore price and for spot enterprises to hedge at high prices. [5][95] 3. Summary by Relevant Catalogs 3.1 Iron Ore Supply and Demand Analysis 3.1.1 Production and Sales of the Big Four Mines in H1 2025 - The total production of the Big Four mines in the first half of the year was estimated at 545 million tons, a year - on - year decrease of 0.3% (2 million tons), and the total shipment was 544 million tons, a year - on - year decrease of 0.1% (0.6 million tons). The overall production and sales were lower than market expectations. [12] - In the second half of the year, the production may accelerate, with the increment mainly from Rio Tinto and BHP, but the overall increment may be only about 7 million tons. [12] 3.1.2 Domestic Iron Ore Imports - From January to May 2025, China's cumulative imports of iron ore and its concentrates were 513 million tons, a year - on - year decrease of 5% (26 million tons). Imports from Australia, Brazil, and non - Australia and Brazil all declined. [13] 3.1.3 Non - Australia and Brazil Global Shipments - The current non - Australia and Brazil global shipments depend on the remaining gap in global total demand after subtracting the shipments of the Big Four mines. The marginal cost of non - mainstream mine shipments may be above $90. [29][30] - Australia and Brazil's non - mainstream mines are unlikely to see large increments. Non - Australia and Brazil global shipments are likely to decline. [33][37] 3.1.4 Domestic Iron Concentrate Production and Scrap Steel Consumption - From January to May 2025, domestic iron concentrate production decreased by 5.4% year - on - year (6 million tons). In 2025, it is expected to continue to contribute to the reduction. [49] - In 2025, domestic scrap steel consumption is unlikely to see a significant increase due to the continuous decline in real estate investment. [49] 3.1.5 Terminal Steel Demand - The real estate market is still at the bottom, and the infrastructure may contribute a small reduction. The manufacturing investment remains at a relatively high level, and the demand for manufacturing steel is expected to maintain its resilience. [56][61] - Overseas iron element consumption has been at a high level. India's steel demand is expected to contribute more than 10 million tons of incremental demand throughout the year. [73][74] 3.1.6 Imported Iron Ore Port Inventory - The total inventory of imported iron ore ports is relatively high, but the low total iron element inventory and the resilience of overseas demand support the iron ore price. The port iron ore inventory is expected to remain balanced in the third quarter. [80][83] 3.2 Iron Ore Market Outlook - The supply of iron ore in China decreased while demand increased in the first half of 2025. In the second half of the year, the supply is expected to increase slightly, and the demand is expected to maintain a certain level. [93] - The trading logic in the second half of the year mainly involves the Fed's interest - rate cuts and global tariff policies. The fundamentals of iron ore supply and demand will remain neutral, and the Platts iron ore price will fluctuate between $90 - $105. [94] - The trading strategy suggests speculatively buying at the bottom of the iron ore price and for spot enterprises to hedge at high prices. [95]

Company Performance - VALE S.A. experienced a decline of 4.79% in its stock price, closing at $9.35, which was a larger drop compared to the S&P 500's loss of 0.84% [1] - Over the past month, VALE's shares gained 0.2%, outperforming the Basic Materials sector, which remained flat, but lagging behind the S&P 500's gain of 1.44% [1] Upcoming Earnings - The upcoming earnings disclosure for VALE S.A. is anticipated to report an EPS of $0.44, reflecting a 2.33% increase from the same quarter last year [2] - Revenue is expected to reach $10 billion, indicating a 0.78% increase compared to the previous year [2] Full Year Projections - For the full year, Zacks Consensus Estimates project earnings of $1.78 per share and revenue of $39.39 billion, representing a decrease of 2.2% in earnings and an increase of 3.5% in revenue from the prior year [3] Analyst Estimates - Recent adjustments to analyst estimates for VALE S.A. are important as they reflect changes in short-term business dynamics, with upward revisions indicating positive sentiment towards the company's operations [4] - The Zacks Rank system, which incorporates these estimate changes, currently ranks VALE S.A. at 3 (Hold) [6] Valuation Metrics - VALE S.A. has a Forward P/E ratio of 5.52, which is in line with the industry average [7] - The company also has a PEG ratio of 0.32, matching the average for the Mining - Iron industry, which is part of the Basic Materials sector [8] Industry Ranking - The Mining - Iron industry holds a Zacks Industry Rank of 93, placing it in the top 38% of over 250 industries [8] - Research indicates that industries in the top 50% outperform those in the bottom half by a factor of 2 to 1 [9]

Core Viewpoint - The average brokerage recommendation (ABR) for VALE S.A. is 2.00, indicating a "Buy" rating based on recommendations from 14 brokerage firms, with 50% of these being "Strong Buy" [2][5]. Brokerage Recommendation Trends - The ABR of 2.00 suggests a positive outlook for VALE, but reliance solely on this metric may not be advisable due to studies showing limited success of brokerage recommendations in predicting stock price increases [5][10]. - Brokerage analysts tend to exhibit a strong positive bias in their ratings, with five "Strong Buy" recommendations for every "Strong Sell" [6][10]. Zacks Rank vs. ABR - The Zacks Rank, which is a proprietary stock rating tool, is based on earnings estimate revisions and is considered a more reliable indicator of near-term price performance compared to the ABR [8][11]. - The Zacks Rank is displayed in whole numbers (1 to 5) and is updated more frequently than the ABR, which may not always reflect the most current information [9][12]. Earnings Estimates for VALE - The Zacks Consensus Estimate for VALE's earnings for the current year remains unchanged at $1.78, indicating steady analyst views on the company's earnings prospects [13]. - Due to the unchanged consensus estimate and other factors, VALE holds a Zacks Rank of 3 (Hold), suggesting caution despite the Buy-equivalent ABR [14].

Core Viewpoint - Multinational companies, particularly Vale, are focusing on sustainable development and adapting their strategies to the Chinese market to create positive social, economic, and environmental impacts [1][4]. Group 1: Sustainable Development Strategy - Vale integrates sustainability into its business practices, aligning its ESG goals with the United Nations' 2030 Sustainable Development Goals (SDGs) [4][5]. - The company has set specific targets to reduce its carbon emissions, including a 33% reduction in absolute emissions by 2030 and achieving net-zero emissions by 2050 for Scope 1 and Scope 2 emissions [6][20]. - Vale is the first mining company to establish quantified reduction targets for Scope 3 emissions, which account for approximately 98% of its total emissions, primarily from steel production [6][10]. Group 2: Technological Innovations - Vale is deploying AI technologies to optimize resource management, carbon reduction, and supply chain efficiency, including projects like "smart mining" to reduce truck fuel consumption and greenhouse gas emissions [2][14]. - The company has invested in AI since 2016, deploying around 40 AI products and 1500 models across 80 projects to enhance operational efficiency and safety [14][15]. Group 3: Future Plans in China - China is Vale's largest market, with 187 million tons of iron ore exported in the previous year, accounting for over 60% of its total iron ore sales [17][19]. - Vale plans to invest 70 billion Brazilian Reais in the "New Carajás" project over the next five years to increase iron ore and copper production [17]. - The company is collaborating with Chinese partners to build a mineral processing plant in Oman, expected to process 18 million tons of iron ore annually by mid-2027 [19].

Group 1: Production Capacity and Guidance - In 2024, Vale and Rio Tinto's combined actual production is 65.565 million tons, with a slight increase in guidance for 2025 to 66.050 million tons, reflecting a cautious approach despite significant planned capacity increases of 40.05 million tons [1] - BHP and FMG's combined production for FY2024 is 45.376 million tons, with a downward adjustment in guidance for FY2025 to 45 million tons, indicating a divergence between planned capacity increases and production guidance [1] - Vale's capital expenditure for iron ore projects in 2024 is $3.943 billion, showing ongoing investment in capacity expansion [2] Group 2: Specific Projects and Their Impact - The Serra Sul+20 project aims to increase annual capacity to 12 million tons, with a total investment of approximately $2.844 billion, expected to contribute 500,000 tons of new capacity in 2025 [5] - The VGR1 plant renovation project is designed to restore wet processing capacity, with an annual capacity of 1.7 million tons and an investment of $67 million, expected to contribute 560,000 tons in 2025 [6] - The Capanema capacity maximization project aims to add 1.5 million tons of capacity by 2026, with a total investment of $913 million, contributing 495,000 tons in 2025 [7] Group 3: Production Management and Challenges - Vale maintains a production guidance range of 32.5 to 33.5 million tons for 2025, despite a significant planned capacity increase, reflecting careful management of resource depletion and production rates [11] - BHP's production guidance for FY2025 is adjusted to 25 million to 26 million tons, primarily due to ongoing capacity ramp-up and resource depletion management [14] - FMG's production guidance for FY2025 is set at 19 million to 20 million tons, with a focus on the Iron Bridge magnetite project, which is expected to contribute 700,000 tons of new capacity [19] Group 4: Overall Industry Trends - The overall trend shows a significant mismatch between new capacity additions and production guidance across the four major mining companies, primarily driven by resource depletion and declining ore grades [21] - The combined depletion rate for the four major mines is estimated at 3.9%, leading to substantial reductions in expected production despite planned capacity increases [21]

Core Viewpoint - The article emphasizes the ongoing transformation in the economy, highlighting the integration of new technologies with traditional industries, and the role of the Banglink closed-door meetings in facilitating collaboration between large enterprises and innovative companies [1]. Summary by Sections DEMO WORLD Conference - The DEMO WORLD conference was launched in 2021 to become a significant platform for open innovation in China, connecting government, industry clusters, and entrepreneurs [1]. - The Banglink closed-door meetings have successfully facilitated strategic partnerships between over a thousand innovative companies and industry giants across various dimensions, including technology development and capital injection [1]. Upcoming Banglink Event - The 2025 Banglink closed-door meeting is scheduled for July 4, 2025, in Songjiang, Shanghai, featuring 20 global enterprises and 30 active investment institutions for 1-on-1 discussions [2]. - Notable participating companies include Murata Manufacturing, Corning Display, and BYD Investment, among others, with a focus on real collaboration opportunities [2][4]. Collaboration Needs - The latest collaboration needs focus on low-carbon and sustainable development, including hydrogen technology and carbon recycling [5][8]. - There are over 200 collaboration demands across six core areas, targeting a trillion-dollar market with 20 industry giants [7]. Key Areas of Focus - Key areas include sustainable carbon source technologies, advanced manufacturing, intelligent terminals, and biotechnology [9][10][12][14]. - Specific technologies mentioned include clean energy materials, robotics, and advanced food packaging technologies [12][16]. Event Process - The event process includes a registration deadline on June 20, followed by online matching from June 25-26, and the on-site meeting on July 4 [15][19].

Company Performance - VALE S.A. closed at $9.27, reflecting a +1.53% change from the previous trading day's close, outperforming the S&P 500's gain of 0.41% [1] - Over the past month, VALE's shares have decreased by 2.56%, underperforming the Basic Materials sector's gain of 2.3% and the S&P 500's gain of 6.13% [1] Earnings Expectations - The upcoming earnings report is expected to show an EPS of $0.44, a 2.33% increase compared to the same quarter last year, with quarterly revenue anticipated at $10 billion, up 0.78% from the previous year [2] - For the full year, analysts expect earnings of $1.78 per share and revenue of $39.39 billion, representing changes of -2.2% and +3.5% respectively from last year [3] Analyst Estimates - Recent changes to analyst estimates for VALE S.A. indicate shifting business dynamics, with positive revisions suggesting analyst optimism regarding the company's profitability [4] - The Zacks Rank system, which evaluates estimate changes, currently ranks VALE S.A. at 3 (Hold), with a 1.55% decline in the Zacks Consensus EPS estimate over the past month [6] Valuation Metrics - VALE S.A. has a Forward P/E ratio of 5.14, which is in line with the industry average [7] - The company also has a PEG ratio of 0.29, matching the average PEG ratio for the Mining - Iron industry [8] Industry Context - The Mining - Iron industry, part of the Basic Materials sector, holds a Zacks Industry Rank of 92, placing it in the top 38% of over 250 industries [9]

Core Insights - The article emphasizes the importance of in-depth research and insights for informed investment decisions in the Latin American equity market [1] Group 1 - The company has over 5 years of experience in equity analysis specifically focused on Latin America [1] - The research provided aims to assist clients in making informed investment decisions [1]

Core Insights - Vale S.A. is at a critical juncture, facing challenges such as accidents, regulatory uncertainty, and high dependence on Chinese demand, but is showing signs of strategic reinvention [1] Group 1: Company Strategy - The new strategy of Vale S.A. emphasizes a shift towards reinvention and adaptation to current market conditions [1]

Core Viewpoint - Vale's stock performance has lagged behind competitors, with a year-to-date increase of approximately 10%, compared to ArcelorMittal's 36% and United States Steel's 26% [1] Financial Performance - Q1 2025 earnings showed a revenue of $8.12 billion, a 4% decline year-over-year, slightly below the consensus estimate of $8.39 billion [2] - Net income decreased by 17% to $1.39 billion from $1.67 billion in Q1 2024 [2] - Free cash flow dropped significantly to $504 million from $2.2 billion in Q1 2024 [2] - Iron ore production fell by 4.5% to 67.7 million metric tons due to heavy rainfall, while sales volumes increased by 3.6% to 66.1 million tons [2] - The average realized iron ore price was $90.80 per ton, nearly a 10% reduction compared to the previous year [2] - Copper and nickel production both rose by 11%, reaching approximately 90,900 tons and 43,900 tons, respectively [2] Market Position and Strategy - Vale's focus on cost efficiency and strategic project development is expected to enhance its performance despite declining commodity prices and adverse weather [3] - The company has acquired the remaining 50% interest in the Baovale iron ore project, gaining full control of the Agua Limpa mine [6] - Vale aims to source 90% of its natural gas from the free market by 2025 through agreements with Eneva and Origem Energia [6] - The company plans to reduce cash costs by 15% in 2025 compared to 2024, optimizing logistics and utilizing automation [7] - Vale increased shipments to Europe by 18% in Q1 2025, benefiting from the EU's carbon border adjustments [7] Valuation Metrics - Vale's current Price-to-Earnings (P/E) ratio is 6.6x, significantly lower than the 9.3x in 2020, indicating potential undervaluation [8] - In comparison, ArcelorMittal's P/E ratio is 17.4x, and United States Steel's is 22x, suggesting that Vale's stock price is substantially below various intrinsic value estimates [8]