Replies to post #422 on The Rising Influence of Rising Affluence

[DewDiligence]

Bovespa Is Partying Like It’s Carnaval Every Day

http://www.reuters.com/article/marketsNews/idCNN1939377120091019

›Brazil stocks at highest closing level in over a year

Mon Oct 19, 2009 5:49pm EDT

SAO PAULO, Oct 19 (Reuters) - Brazilian stocks rallied on Monday, to its highest closing level in more than a year as global stocks surged to fresh 12-month highs and as heavyweight commodity stocks jumped.

The benchmark Bovespa index .BVSP surged 1.57 percent to 67,239.45 points -- its highest closing level since June 2008. The index has gained about 79 percent so far this year.

The real (BRBY), however, weakened slightly to 1.710 per dollar. [The Real is up 35% vs the Dollar this year—see next post.]

Global stocks rallied as surprisingly strong corporate results spurred a bullish mood in financial markets, also boosting the price of oil and other commodities.

…Upbeat expectations on the global economy tends to boost oil and metal prices on the view that demand for commodities will improve in tandem to a recovery.

In local trading, mining giant Vale (VALE) was the biggest weighted gainer, up 3.11 percent to 41.40 reais. State-run oil company Petrobras also surged, gaining 2.64 percent as oil prices rallied above $79 a barrel.

Vale has recently seen not only "good demand from China (as shown in recent Chinese imports data) but also very important a pick up in demand from the ex-China world," said a Credit Suisse report dated Monday.

Steelmakers have benefited in recent weeks from expectations that Rio de Janeiro's victorious Olympic bid for 2016 will boost development and infrastructure projects in Latin America's largest economy.

"The structural fundamentals for the steel industry remain in place and we reiterate our positive outlook for sector," noted a Deutsche Bank report dated Monday by analyst Rodrigo Barros.

Interest rate futures were broadly higher. The central bank is widely expected to keep rates steady when it meets this week but to raise rates next year.‹

[DewDiligence]

Brazil Scraps Proposed Export Tax on Iron Ore

[There never was a serious plan to enact such a tax, IMO, but the threat served its purpose in allowing Lula to get a face-saving concession from VALE (#msg-42685561).]

http://www.reuters.com/article/marketsNews/idAFN0352309620091021

›Wed Oct 21, 2009 12:47pm EDT

BRASILIA, Oct 21 (Reuters) - Brazil's government has scrapped a plan to tax iron ore exports after President Luiz Inacio Lula da Silva met with the head of miner Vale (VALE), a government source told Reuters on Wednesday. The source said the government floated that proposal as a means of pressuring Vale to hike its investments in Brazil.‹

[DewDiligence]

Vale Invests in Another Brazil Steel Project

[Are these investments dictated by expected return on capital, or are they mostly political—a way to placate a federal government that wants more jobs, especially in the poor northern states such as Pará?]

http://www.reuters.com/article/marketsNews/idAFN2639907620091126

›Thu Nov 26, 2009 3:22pm EST

RIO DE JANEIRO, Nov 26 (Reuters) - Iron ore miner Vale (VALE) said on Thursday it planned to invest in another steel mill -- this time in Para, the northern Brazilian state where its main Carajas iron ore mine is.

The world's largest iron ore miner will take a 25 percent equity stake in the new laminated steel plant with steel company Aco Cearense holding the 75 percent majority stake.

The plant will be integrated into a larger Vale laminated steel project called Alpa in the state, but Vale is looking for a partner in the larger project. Investments will depend on the results of a feasibility study.

The Vale-Aco Cearense plant is expected to cost $750 million and have the capacity to produce 710,000 tonnes a year of hot laminated steel, 450,000 tonnes of cold laminated steel and 150,000 tonnes of galvanized steel with Alpa supplying steel plates to the project.

Buckling under heavy pressure from the government of President Luiz Inacio Lula da Silva for the company to invest more in Brazil, Vale announced in October it would build the 5.2-billion-real ($3 billion) Alpa complex with a strategic partner.

Although Vale's official policy has been not to take majority stakes in steel projects -- saying it does not want to compete with its clients -- the company is a major stake holder in four large steel projects that will raise Brazilian capacity by 15.5 million tonnes a year, or 50 percent of current capacity.‹