Vale SA the world’s largest iron ore producer, declined to the lowest in almost three years as prices for the steelmaking material slumped on slower Chinese economic growth.

Vale, based in Rio de Janeiro, dropped 3.2% to close at 34.19 reais in Sao Paulo, the lowest since September 11th 2009. The stock lost 9.6% this year, compared with a 3.1% gain in the Brazilian benchmark Bovespa Index.

Iron ore for immediate delivery fell 4.9% to USD 99.60 a tonne on August 23rd 2012, its seventh consecutive decline to the lowest since December 2009, according to data compiled by The Steel Index Ltd. Shares of Vale are falling because of lower iron ore prices and signs of slowing economic conditions in China, the biggest user of the steelmaking raw material, said Leonardo Brito, an equity analyst at hedge fund Teorica Investimentos.

He added that “Prices are below USD 100 already, which is worrying. If that continues for some time, the profit forecasts for Vale will be lowered.”

Source - Bloomberg

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