I had/have these stocks on/off for the last 5 years. I made a pretty penny with both. My experience is that SID is more leveraged and more volatile. A portion of SID's earnings Is based on iron ore, which is at the mercy of Chinese's demand. And excess capacity from other major players in Australia to come online in 2014-2015 will put pressure on iron ore prices. GGB doesn't have its own iron supply, they played with the idea couple of years ago and was looking for a partner but scrapped it because iron prices was on a downtrend.
Right now, I have SID stocks because it's a higher risk, higher return play. But I would open a position on GGB if prices is right again. I almost bought it at 7.65 two days ago, would have made my 10% on Friday. Oh well, be patience, all stock runs in a up and down cycle.
China has excess Steel making capacity BUT buying ore - so for GGB to do well it has to sell to others and not China. Most other countries are still in the dumpster - like Europe. And US - we have our own excess capacity - look at X, Nucor, AKSteel, Cliff etc. Ore prices are forecasted to be stable and very profitable for SID even at the lower expected prices next year. With 70% of their revenue from domestic markets over the next 2 years - SID is the way to go. If Europe comes back strong next year - it'll be a feast for everybody - Ore & Steel.
The fact is - internationally, there is a glut of Ore & Steel capacity at current demand levels. SID mines are low cost and are profitable even at a lower level of production - on the other hand Steel plants has to operate at a pretty high capacity just to break even.
SID will do very well because of ore and Steel - it's the better horse at this point.
I am entirely in agreement with you. Over 70% of SID products were marketing internally. Chinese demand is in a low percentage. Yet Chinese demand is actually increased due to ongoing building up big warships and construction.
Own all for many years in and out always kept Div ....different animals. all diversified. Both have Ore. SID blew away earnings. Something the market was not thinking of. That is why the run and SID raised steel prices.. GGB is world over...big float less Vol. SID smaller float so can move faster. SID will make the best strides as GGB 14-17 highs but many splits. SID 20s and none that Im aware off. Watch earnings if SID lives up to its name like last qtr this stock is very undervalued. If Tim get this to move which just down a tad I would add to the dip.... might break above resistance like it was going for Friday.MO only. DIV on time not matter what the price.Agree Homer Ore picking up Chinas PMI bodes well for VALE upgrade Friday.