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STXNEWS LATAM-UBS says Vale shares not yet a bargain

Reuters - UK Focus

It is still too early to buy Vale shares despite the stock's outperformance of the falling price of iron ore in recent weeks, Andreas Bokkenheuser, analyst at UBS (Xetra: UB0BL6 - news) , said on Tuesday.

Vale's share price suggests that iron ore should be at $104 per tonne, according to UBS estimates. That level is not low enough to present a buying opportunity, Bokkenheuser wrote in a note to clients.

The price of iron ore fell below $90 per tonne for the first time in almost two years this week due to growing supply from major mining companies including Rio Tinto (Xetra: 855018 - news) and BHP Billiton.

Vale's New York (Frankfurt: HX6.F - news) -traded common shares would become more attractive were they to reflect an iron ore price of $80-100 per tonne, which UBS estimates would be a level of around $10-11 per share.

The New York shares fell 1 percent to $12.60 in mid-day trading.

(Editing by Andrew Hay)