If you have even the slightest concern about inflation in general, or the wide-ranging effects of higher steel prices in particular, you'll want to cast an eye on events in Brazil ... and Australia … and China … and Europe … and most of the developed or developing world, for that matter.
As recently as Tuesday, Rio de Janeiro's Companhia Vale do Rio Doce
In June, Vale and most Asian steelmakers agreed to price increases retroactive to April, ranging between 65% and 71%. But now that Brazil-to-China freight rates have slid by about 35%, Vale is also trying to bring its prices more in line with Australian suppliers BHP Billiton
But there are other (potentially big) changes afoot at Vale, some of which could have at least a tangential effect on the company's approaches to all its businesses. For instance, it apparently wants to enter steel manufacturing by constructing its own mills, along with increasing its activities in aluminum and other metals. At this point, about 70% of its revenue comes from iron ore, and another quarter results from its operations in nickel, a metal whose prices have slid substantially.
With that in mind, I wouldn't be surprised if Vale, its pockets flush from a recent influx of capital, eventually emerged with a meaningful acquisition. I think Pittsburgh-based aluminum manufacturer Alcoa
Nevertheless, Vale remains smack-dab in the middle of the world's tightening and important quest for natural resources. On that basis alone, Foolish investors should take at least an occasional glance at it.
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