On 05 March 2010 Vale S.A.'s (Vale) ADR reached our target price. However our fundamental outlook remains unchanged and we therefore believe that the ADR's 6-12 months upside potential has now been exhausted. Accordingly we downgrade the ADR rating from a BUY to a HOLD. We will reassess our ADR (1 preferred ADR=1 Brazilian preferred share) rating in our next update report....

Vale S.A. (Vale) is set to acquire the fertilizer business of Bunge Limited (Bunge) which will provide an impetus to the mining giant’s fertilizer business, which hitherto formed a small portion of Vale operations. The proposed acquisition diversifies Vale’s operations and creates synergies as its existing logistic facilities for iron ore transportations can also be used for fertilizer transportation. Given our positive outlook for the fertilizer business and expected synergies…

We believe commodity demand and prices bottomed out in 2Q 09 and expect average metal consumption prices through FY 2010 to be higher than current levels. Global economic recovery is expected to lead to improvement in steel demand from key consuming industries like automotives and construction, supported by the ongoing impact of government stimulus spending and restocking of inventories. ...