OREANDA-NEWS. February 09, 2015. Fitch Ratings does not expect a rating downgrade for Vale S.A. (Vale) even under a most onerous operating scenario of iron ore prices at USD65/mt and low base metal prices during 2015 and 2016, according to the latest of Fitch's 10-report series 'Top 10 Most-Actively Traded LatAm Corporates'.

One report in the series will be released each day through Feb. 13 as per the schedule found at the bottom of this release.

"Even under the worst conditions, credit metrics should materially recover by 2017 with sound liquidity and robust free cash flow (FCF)," said Jay Djemal, a Director at Fitch. "Should iron ore prices remain at USD65/mt over the next two years, the company has the ability to weather the storm."

Fitch expects iron ore prices to be under pressure in 2016 due to weaker than expected Chinese steel production growth, which Fitch now projects to grow by only around 1% year-on-year in 2015. Fewer mine closures than expected due to lower oil prices, weakening commodity currencies. and falling freight rates will also pressure prices. It is likely that iron ore prices will begin to recover in 2016 due to unprofitable excess capacity being displaced from the market.

Fitch expects Vale's management to proactively take appropriate measures to shield the company's capital structure from changing price dynamics. The company has a strong track record of delivering on stated commitments. Fitch iron ore price assumptions for its financial models are USD65 per tonne in 2015 (China import iron ore fines 62% CFR), USD75 per tonne in 2016, and USD80 per tonne over the long term.

Fitch's Top 10 Most-Actively Traded LatAm Corporates series will be released one report per day as follows:

Feb. 2: Oi Scenario Analysis - Asset Sales and Industry Consolidation are Key to Credit Profile Recovery
Feb. 3: Cemex Scenario Analysis - Road to Investment Grade Runs through the U.S.
Feb. 4: Ecopetrol Price and FX Sensitivity Analysis - Rating Linkage with Sovereign Could Weaken
Feb. 5: America Movil Scenario Analysis - No Separation Anxiety
Feb. 6: Vale Scenario Analysis - Ratings Rock Solid Despite Industry Softness
Feb. 9: Pacific Rubiales Scenario Analysis - Preserving Liquidity Depletes Reserves
Feb. 10: PDVSA - Something's Gotta Give
Feb. 11: Cencosud Scenario Analysis - What Factors Could Stabililze the Company's 'BBB-' Rating
Feb. 12: Construtora Norberto Odebrecht Scenario Analysis - Could CNO Lose its Investment Grade Rating due to Lava Jato Scandal?
Feb. 13: Petrobras - A Political Labyrinth

For more information, a special report titled "Vale S.A. Scenario Analysis" is available on the Fitch Ratings web site at www.fitchratings.com.
Contact:

Primary Analyst
Jay Djemal
Director
+1-312-368-3134
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602

Secondary Analyst
Debora Jalles
Director
+55-21-4503-2600

Joe Bormann, CFA
Managing Director
Deputy Regional Group Head
+1-312-368-3349


Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com.

Additional information is available at 'www.fitchratings.com'.