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  • IEA Oil Release: A Counterproductive Idea and a Market Opportunity [View article]
    Personally, I see election politics at work. Oil is heading down anyway, given the softening of the economy. This action is "piling on" by the U.S. administration - allowing the election claim that "See - we broke the backs of the oilcos and OPEC". I agree that the action is conflicted as this does have a stimulative effect on the economy, but the primary motivator is probably political
    Jun 24, 2011. 12:22 PM | 3 Likes Like |Link to Comment
  • FirstEnergy (FE +4.9%) leads S&P 500 gainers, as Citigroup raises its price target to $46 following a "large positive surprise" in the capacity auction at wholesale power market PJM: a 2014 price of $125.99/megawatt-day, up from a year-ago $27.73. (earlier: ENOC)  [View news story]
    Not so sure, youngman. Lots of coal plants leaving the grid with the advent of MACT regulation...
    May 16, 2011. 02:25 PM | 1 Like Like |Link to Comment
  • Why Oil Is Not Going to $200 [View article]
    Short term, oil is inelastic, long term very elastic, which is your point. I'd be a bit careful with respect to electricity, however. In the U.S., we are at the sunset of cheap electricity. Legacy powdered coal power plants given their highly depreciated state, often produce power for 2¢/kWh. As environmental regs close these units, the nearest replacement (Nat. gas CCGT's) are coming in at 6¢/kWh. Wind? 12¢. Nuclear? 13¢+ kWh. Electric cars are no panacea.
    Mar 8, 2011. 08:48 AM | 2 Likes Like |Link to Comment
  • Contrarian Ideas: The Most Underestimated Companies Trading Near 52-Week Lows [View article]
    John Maynard Keynes said: "Successful investing is anticipating the anticipations of others."

    You've constructed a nice watch list - but absent a sign of incipient upward momentum, this list is, to use another cliche, catching a falling knife.

    Gotta have momentum. We all dream of catching a stock at the absolute bottom, but its dumb luck and really risky.
    Mar 4, 2011. 09:35 AM | 2 Likes Like |Link to Comment
  • History Lesson: Oil Price Spikes and Their Aftermath [View article]
    A great article that implicitly separates the near term events (largely inconsequential) from the fundamental supply/demand balance issue. The latter tends to give the former "legs"
    Mar 3, 2011. 02:23 PM | Likes Like |Link to Comment
  • A Sense of Optimism for Steel Stocks [View article]
    Hot rolled steel is ticking at $880/short ton stateside, up from $620-ish a couple of months ago. Iron Ore is completely bull. X has a much better ore position than most. Steel producers are like oil refiners - playing the spread between product and ore (or product and scrap). X is truly integrated, which at this time is a real +.
    Feb 17, 2011. 01:59 PM | Likes Like |Link to Comment
  • Expecting Australian Coal Mines to Remain Under Water for Months [View article]
    Yes, cost of steel production is going up. BUT - the availability of materials is not uniformly distributed. Asian mills are more dependent on Australian mines. To manage their material shortages, I am expecting these mills to increase prices to shoo their customers away for a little while. Those customers still need steel, and who has it? The mills that have the intact raw material supply chains. The thesis is that N.American mills (but not all mills) would benefit.
    Jan 19, 2011. 09:55 AM | Likes Like |Link to Comment
  • Expecting Australian Coal Mines to Remain Under Water for Months [View article]
    Tracking your investment thesis to its logical end, one should short Asian/European steelmills and go long North America/S. America. Also, one should go long scrap exporters. Lack of coking coal = lack of coke = lack of pig iron = reduced steelmake.

    Scrap (a fungible substitute for pig iron) should become more valuable. Ergo, a firm like Schnieder Steel (SCHN) should get perky. If anything, they're selling off after a nice rally. Hmm...

    Steelmakers with undamaged supply chains (SA, NA) should see the orders come their way. AKS, NUE come to mind. AKS is not looking so hot. NUE a bit better, but no reaction to this news.

    So, I guess I'm not totally buying the "Australia is knocked out" thesis. I'm sure that met coal producers will talk their book, but the steel market just doesn't seem to moving in sympathy where it should be moving.
    Jan 17, 2011. 09:58 AM | 2 Likes Like |Link to Comment
  • Calculating Mesabi Trust's Q4 Distribution [View article]
    Nice work dissecting an investment that has had a ton of momentum and two tons of opacity. Feel a lot better about it now. Nice work
    Dec 20, 2010. 03:48 PM | 1 Like Like |Link to Comment
  • Deficit Commission: How Mortgage Deductibility Affects Housing Prices [View article]
    Do we really think residential home buyers operate in this left-brained logical way? Really? C'mon. I'll agree that the math works. But many factors permeate consumer purchases.
    Dec 13, 2010. 11:44 AM | 3 Likes Like |Link to Comment
  • U.S. Steel Breaks Out [View article]
    Ditto on CLF. Very well managed, and as it is in a global commodity business, I view them (and MSB, and HGT, and BPT) as hedges against a devaluing US $.
    Dec 10, 2010. 02:12 PM | Likes Like |Link to Comment
  • U.S. Steel Breaks Out [View article]
    A technical view on the equity, and a nice breakout pattern, to be sure. Questioning the impact of met coal markets and ore markets on domestic producers. Met coal, from what I read, has gone bonkers - net domestic availablity of met coal is down 50%, largely due to increased exports to China. Met coal producers have a strong hand at the bargaining table. Meaning: The margins for AKS, X, and domestic operations of MT are likely to take a squeezing. Your views on this please...
    Dec 9, 2010. 05:45 PM | Likes Like |Link to Comment
  • Asian Growth Encourages Tata Steel to Go Shopping [View article]
    I'll respectfully disagree with Ben. Ben's right about the overall operating costs, of course. But invest in new capacity? When almost every integrated steelmaker trades at a discount to book value? Any management that would make a decision that instantaneously turns dollars into quarters (or rupees into whatever is smaller) should get fired and be sent to bed without their supper.

    Tata's management is doing the right thing. This industry needs MORE consolidation.
    Nov 29, 2010. 10:20 AM | 1 Like Like |Link to Comment
  • Nucor Corporation: Nerves of Steel Required Now; Rewards Later [View article]
    It's been said before, but it bears repeating: NUE's great strength (vs. MT, X, etc) is the innate hedge in it's income statement. A scrap based NUE is a hedged NUE, as steel scrap and hot rolled sheet steel are correlated to a large degree. Also, the pay structure at NUE (smaller base, BIGGER bonus) adds to the hedge against cyclicality.

    That said, I seriously question the decision by NUE to enter into the Virgin Iron Units biz by dint of its announced DRI facilities. Iron ore is an oigliopoly. This decision tends to fix NUE's costs. DiAmico is a super smart guy, but I really question this decision.
    Nov 22, 2010. 09:27 AM | 2 Likes Like |Link to Comment
  • 'Stranguflation' in the U.S. Economy [View article]
    Before we buy bullets and move to our fortified cabin in Idaho, one must give consideration that: a) all of this makes our manufacturing base stronger, as the "local" value add is cheaper to everyone else - (ArcelorMittal USA will do better than ArcelorMittal Europe) and b) China will be in a nine line bind. Their admittedly mercantilist strategies are approaching endgame.

    Not a comfortable world - just a self correcting one.
    Oct 28, 2010. 02:20 PM | Likes Like |Link to Comment