Virgin Media, Inc. Message Board

>>>The China story (your previous post) was from government sources, and I'm not so trusting of their stats. I'm reading a lot about power shortages and rationing <<<

1. My understanding is that power outages and rationing are stemming from excess demand, not efforts to reduce supply.

2. The Chinese gov't is under pressure to underestimate growth to show that their reforms are working. The "independent" reports that I've read indicate that the gov't stats are continuing to underestimate growth and underestimate the Governments efforts to curb growth.

3. On an anecdotal level, my neighbor returned from a 3 week business trip to china and said "China looks like a bunch of capitalists were let loose on a new playground"

He also indicated that China wants to show themselves off to the world for the 2008 Olympic games, and the pace of construction in Bejing was incredible.

Finally, I see incredible high and increasing shipping prices as a factor to the steel companies that I hold, and I see these prices as indicative of strong demand.

How long demand can last seems like a valid debate, but whether or not we currently are seeing strong demand seems rhetorical.

I try very hard not to be biased and play Devil's advocate, but no matter how I add things up, I see a strong outlook the next couple of quarters for steel.

FWIW

HYGS

HYGNS?

<I also like EdF in France, but also haven't bought. >

And Areva...

I don't get know respect. lol

Later guys. No work for the gov't today, so I'm off to play with the kiddies.

GH:
I own three steel related companies: MTLM, Bluescope, and IIIN.

Putting aside the volatility that Kart mentioned, the weak dollar, and China, there are two other big factors that I would draw to your attention:

1. TEA-21: The highway improvement act. While stalled in Congress for a long time, most feel that this bill will go through, creating an ongoing demand for raw materials. The question you want to evaluate is how large a bill will be passed versus what is the current market expectation that is factored into stocks.

2. Takeovers: As you saw the big merger that just took place, many other smaller ones appear to be lining up in the steel industry. When stocks with little debt start trading with low p/e ratios, they start to be eyed as take over targets. This is precisely what is happening with MTLM. While you could attribute there current stock price appreciate to their last earnings report, a good portion of the boost (IMO) is attributable to them being cited as an acquisition target by an Aussie company. The company cited MTLM and SCHN, but MTLM with only $12 million in debt left on thier books and lower p/e ratio and overall market cap is the more likely target.

I have listened to/read Q3 results for X, MTLM, IIIN, NUE and all of them expect continued/increasing demand through Q1 2005.

I own equal shares in all three companines, so MTLM is the bulk of my dollars, then IIIN, the Bluescope.

Of all of these stocks, the most appealing to you would likely be IIIN. Just listed from OTC to the NAS, it had a great quarterly report, but its share price was held down by its largest external shareholder, Towle, selling about a third of their holdings (they are a microcap investment firm). IIIN makes wire strand that is used in tires and to reinforce concrete. It's a tricky play because steel is an input, but their demand for their steel reinforcement products rise with the price of steel. I am very bullish on this company and have been impressed during their last two conference calls. They (IMO) stand a good chance as a takeover target if their share price does not appreciate more.

2. MTLM-in addition to the potential buy out, MTLM is almost debt free and sees opportunity to use the freed up cash for continued reinvestment, rather than share buyback or dividends. While they don't give forward guidance, the cited rising export prices and are most likely looking at a very favorable Q4 report. I intend to sell half my holdings within the next 6 months, and will likely buy a puts because numbers aside, one unfavorable comment about TEA-21 or takeovers and the stock will get whacked.

3. Bluescope. Not for you but I will likely hold this one forever. Trades on the pinksheets, pays a 3.5% dividend, and has a lot of expansion plans for SE Asia (Tiwian). Unlike MTLM, they have a finised product output of Hot-Rolled Coil steel, so it's further away from inputs and can be more susceptable to input price flucuations. I sold my AKS to buy this company becuase I like the international diversification aspect.

There you go. FWIW

Some info on Iron Mining.

I work with a consultant to the companies in Minnesota. The miners believe the current market will continue to grow. They are backing that with siginificant spending on expansion. By significant I mean more than they have spent since the 1960s.

How that plays into steel stocks I will let others decide.

they are volatile as crap and surprisingly small overall market caps so they are very suseptibe to BIG sentiment swings...I think ya own 'em when people are bearish on the economy and the dollar acts crappy and sell when the reverse is true...that is, when everyone wants 'em, you wanna be on the sidelines...