A Big Upgrade for Vale

After backing down to spend much of the past six months at a four-star rank, Vale (NYSE: VALE  ) has impressed enough top-performing members of our 165,000-strong Motley Fool CAPS community to regain its five star composure lately. A total of 6,427 members have given their opinion on the major miner, with many of them offering analysis and commentary explaining the recent optimism.

Many CAPS members are confident that Vale will benefit from a global increase in demand for commodities, especially as emerging economies continue to expand rapidly. The switch to quarterly contract agreements appears to be paying off for Vale, as Wall Street analysts estimate big gains in second-quarter earnings for the company. Along with peers BHP Billiton (NYSE: BHP  ) and Rio Tinto (NYSE: RTP  ) , Vale scrapped annual iron ore pricing contracts and replaced them with quarterly contracts, a move that is expected to lead to big increases in the sales price of its iron ore. And after a period of declining prices in recent weeks, a top sales executive for Vale recently said he expects iron ore prices to rise again in the fourth quarter.

An improved outlook is also surfacing among other major commodities and materials sectors, which is giving more investors confidence in diversified suppliers as well as Vale. Alcoa (NYSE: AA  ) swung to a second-quarter profit and raised its forecast for global aluminum consumption this year, while Freeport-McMoRan (NYSE: FCX  ) is seeing an uptick in demand for copper, which is prompting it to restart some operations that were halted during the recession. And Russian mining and steel giant Mechel (NYSE: MTL  ) reported strong first-half production numbers, with output of coal for steel production showing a 111% increase.

Vale has also recently been teaming up in a variety of ventures that aims to expand its presence. It's taking part in a joint venture steel plant in Brazil with South Korea's Posco and recently began production at its phosphate rock mine in Peru, which Mosaic (NYSE: MOS  ) and Mitsui also have a stake in.                    

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