Vale (Vale3): relief in the trade war does not guarantee sustained recovery of commodities, says BTG

BTG Pactual said it continues with a cautious view of Vale (Vale3), despite the relief in the trade war, after last week negotiators from the United States and China said they will limit tariff levels for 90 days while discussing a broader deal.

According to the bank, although this is a positive surprise, the perspective for the commodity sector remains challenging because of the vulnerability of the Chinese economy, which continues to press steel and maintain a shadow on iron ore prices.

“Although markets continue to be driven by events – reacting to Trump and trade war tweets – we maintain a pessimistic stance in relation to the sector due to the imbalance between supply and demand, the limited impulse of profits and the weak free cash flow (FCF) income,” he said.

Reading overlaps with what the bank considers as some improvements in Vale’s investment thesis, with the reduction of C1 cash costs, institutional improvements and progress over Samarco.

“We still have difficulty seeing a significant potential for appreciation, with the actions of Vale being negotiated at about 4.4x the EBITDA 2025 And offering dividend yields in the 7-9%range, ”analysts wrote.

They added that Vale’s expanded net debt increased to $ 18 billion, with the company’s administration to reduce it to $ 15 billion in the next quarters-“which suggests little space for extraordinary dividends.”

BTG projects iron ore at $ 95/t in 2025 and $ 85/t to 2026, below the current level of $ 100/t.

On Friday (16), the future prices of the ore of iron fell ofSigns of ofWall of ofhe sends of short term and caution in relation to the resolution of the tariff war between China and the USA.

The commercial truce between the two countries allowed a weekly base gain.