Morgan Stanley sees volatility in mining sector, adjusts ratings

Investing.com -- Morgan Stanley expects elevated volatility in the mining sector through 2025, particularly in the first half, citing global growth headwinds and uncertain economic policies in China and the U.S.

The brokerage downgraded Vale SA ADR (NYSE: VALE) to "equal weight," noting the iron ore miner's underperformance relative to peers despite recent positive catalysts, such as a new CEO and agreements addressing legacy issues. Iron ore supply surpluses and uncertain pricing are expected to weigh on the stock in the near term.

Morgan Stanley (NYSE: MS) upgraded Southern Copper Corporation (NYSE: SCCO) and Nexa Resources SA (NYSE: NEXA) to "equal weight," citing tighter supply forecasts for base metals like copper and zinc.

A near 12% pullback in Southern Copper's stock from its recent peak has improved its risk-reward balance, despite ongoing political concerns in Mexico.

The firm continues to favor base metal equities over iron ore stocks, pointing to supply deficits in copper, aluminum, and zinc, as well as potential catalysts such as aluminum producer Alcoa (NYSE: AA), which Morgan Stanley named its "top pick" for self-help initiatives and upside to consensus estimates.

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