Brazil’s largest iron ore miner Vale S.A. (VALE) recently announced plans of resuming its Canadian Sudbury operations with temporary employees. On July 13, about 3,100 employees out of the 5,000 at the company’s Sudbury plant had gone on strike. Another 120 workers at its Port Colborne refinery and 450 at Voisey’s Bay in Newfoundland had also joined the strike.

Vale has decided to stop negotiating with Chinese steelmakers on prices of iron ore. It now plans to offer provisional prices on ore shipments, whenever there is one.

China imported huge volumes of iron ore to build inventories at attractive prices. According to Beijing’s National Bureau of Statistics, China bought 58.1million tons of iron ore, up 32% from a year ago. Due to higher inventories in China, Brazil experienced a 6% drop in iron ore export in July compared to the previous year. The situation can even hurt prices

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Chinese Metals Boosted by Stimulus

Tony Daltorio, The Investment U Research Team

At least one government stimulus package seems to be working right now. But, it’s not the United States. If only our stimulus program was as successful as the “cash for clunkers.” Unfortunately, we’re closer to clunker with the rest of economic stimulus.

The stimulus package we’re talking about is in the country that many pundits love to hate – China. So far this year, China’s economy has accounted for virtually all of the world’s economic growth. Including China, global growth is 1.6 percent. Without it, growth was flat to slightly down.

Here are just a couple examples of China’s successful stimulus:

China’s auto market is now growing at 50% per year and has surpassed the United States as the world’s ...

In its statement on Wednesday, the Fed said:  “In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent, and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period." With the release of the July Consumer Price Index numbers, that looks to be an easy promise to keep. The headline CPI was unchanged, and if one strips out volatile food and energy costs, the index was only up 0.1%. On a year-over-year basis, headline consumer prices were down 2.1%, the biggest decline since 1950. Of course, much of that decline was due to the collapse in oil prices last fall. However, year-over-year core inflation was just 1.5%. That is ...

Adding Iron for a Healthy Portfolio

Tony Daltorio, The Investment U Research Team

Hiking along back-trails has a calming effect, is good for your cardiovascular system, and is good for your health in general. It’s serene, with few people around.

Hiking along investment back-trails where few Wall Street sales people are around can also have a good effect on you. It can be profitable and very good for your portfolio’s health.

One such isolated back-trail can be found in the world of commodities, which Wall Street usually gives the cold shoulder. This particular commodity does not even have futures traded on it, so Wall Street completely ignores it.

The commodity is iron ore. (Let’s?) take a look at the positive fundamentals for iron ore and the ways that investors can profit from it.

Iron Ore and China

Iron ore is

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Many investors rarely think about Brazil as a place to put their investment dollars. They think Brazil is just a country that goes crazy over soccer and has a wild ‘Carnival’ every year in Rio. But Brazil is so much more. They may have the best economy in the Americas.

Brazil has made great strides under current President Luiz Inacio Lula da Silva, commonly known as Lula. Lula took office on January 1, 2003 and he has, since being in office, run a very orthodox fiscal policy. The country has maintained fiscal and trade surpluses for the better part of his presidency.

Brazil’s highly capable central bank has followed a very strong monetary policy. They have maintained high levels of real interest rates, which prevented the economy from overheating and creating an over-expansion of credit – unlike the policies of others like the Federal Reserve.

In late April, the Brazilian central bank

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• Mattel (NYSE:MAT) reported second quarter earnings of 6 cents a share, ahead of estimates of breakeven results, despite a 19% revenue fall to $898.2 million

• UBS (NYSE:UBS) initiated coverage of Valero Energy (NYSE:VLO) with a "buy" rating, citing the anticipated cyclical recovery in the industry as well as the firm's structural changes

• A news agency reported Brazilian mining firm Vale is eyeing Mosiac (NYSE:MOS) as a possible acquisition target

• Goldman Sachs (NYSE:GS) cut its rating on Motorola (NYSE:MOT) shares to "neutral" from "buy," citing the recent appreciation stock's price

• Ryder (NYSE:R) increased its quarterly dividend 8.7% to 25 cents

• According to Bank of America (NYSE:BAC) CEO Lewis, "Difficult challenges lie ahead from continued weakness in the global economy, rising unemployment and deteriorating credit quality that will affect our performance for the rest of the year and into 2010." The firm's second quarter, however, bettered estimates of 28 cents a

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Before the market closed on Friday, Vale do Rio Doce (VALE), one of the largest producers and exporters of iron ore and pellets in the world, backed the Tujuh Bukit copper-gold project in east Java, Indonesia. The company had previously decided to invest $40 million to acquire a 60% stake in the project.

According to the project manager Australia-listed Intrepid Mines Ltd, VALE was given an option to acquire stake in the Tujuh Bukit sulphide copper project in east Java. Tujuh Bukit is supposed to have a large gold-silver-copper system beneath a near-surface gold-silver oxide cap.

Vale is making all attempts to cut costs, a necessary step in the wake of the economic crisis. The company has been implementing production cutbacks, primarily shutdowns of higher-cost operational units, reducing workforce costs through negotiations with unions seeking more flexible contracts, etc.

The economic crisis raised huge doubts on cyclical industries

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Gold traded mostly sideways yesterday. Apart from a $10 jump up towards the end of Comex trading and then an equal slide down early on the Globex, it was a tame day. The yellow metal closed at $912.30/oz., up $3.20. Overnight, gold is trending lower. Platinum took off late in Hong Kong yesterday, adding about $16. The rest of the day it trended slightly down to end at $1106/oz., up $9. Overnight, platinum is little changed.

Silver didn’t do much through Hong Kong, but started a roller coaster ride in London that lasted through the Globex only to end the day little changed at $12.82/oz., down 3 cents. Overnight, silver is trending lower. (Click here for charts)

“Summer inertia” has hit gold-market speculators according to Edel Tully at London dealers Mitsui.

“We believe [the Gold Futures] market remains overly long and further liquidation desires remain in the wings. Until this

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Petrobras (PBR), the Brazilian state-run oil giant, yesterday announced its plans to form a joint venture with Vale (VALE), Brazil's biggest aluminum producer, to explore natural gas and oil. According to the agreement, VALE will help Petrobras beat potash deposits in the Amazon, and VALE will receive cost-effective natural gas to produce the metal.Additionally, PBR through its subsidiary, Petrobras Energía, has recently erected a new power generation unit in Argentina in order to meet the increasing industrial demand for power in Argentina.Based on the increase in the number of projects, the company estimates an investment of US$ 174.4 billion during 2009-2013. Thus, PBR raised US$32.5 billion in credit in Brazil and abroad, out of which the Brazilian Development Bank (BNDES) financed US$12.5 billion, and the Chinese Development Bank (CDB) financed US$ 10 billion repayable over 10 years.US ...

* Reports suggest Xstrata and Anglo American (NASDAQ:AAUK) are engaged in merger talks in a deal which could total about $68 billion and result in the combined firm becoming the world's number-three miner behind BHP Billiton (NYSE:BHP) and Vale (NASDAQ:VALE)

* Reuters reported 100,000 of Apple (NASDAQ:AAPL) iPhone 3Gs were sold via preorders, explaining away some of the launch's diminished excitement level. Some news reports said Steve Jobs underwent a liver transplant two months ago in Tennessee, and is still due back at month's end

* Walgreen (NYSE:WAG) is expected to report fiscal third-quarter earnings of 56 cents a share

* UBS (NYSE:UBS) upgraded Vulcan Materials (NYSE:VMC) to "buy," based upon housing and infrastructure recovery

* JP Morgan (NYSE:JPM) upgraded Verisign (NASDAQ:VRSN) to "overweight" from "neutral"

* According to a Wall Street Journal report, Amazon.com (NASDAQ:AMZN) may stop conducting businesses with some retailers in states, which would force sales tax payments on online transactions

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