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  • harehau harehau Apr 11, 2008 9:47 AM Flag

    steel exported?

    If I heard Immelt correctly, they had to take a mark to market loss of $300 million, appliances in the dump and health care weak, all US problems. But if you look at the global numbers as you suggest, they are terrific. And the market will give them a $40 billion haircut. Just looked at the IEA oil numbers and with supply at 82.3mm and demand at 82.2, you can understand why Boone reversed his short position. And China oil imports are up 25%. If you believe in the global growth story, today is a buying opportunity. And the energy story continues. Are we coupled or decoupled?

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    • Harehau,

      I will give you the ten cent answer to your question: short term we are decoupled but longer term we are not decoupled.

      On the oil front, we would be in short supply for reasons that we all understand even if world growth was significantly less than current. In fact, I am beginning to view the various commodity issues in a contrarian way: the fact that we are running out of various basic materials is a hindrance not a help. Another way to look at my ten cent answer is that we are decoupled but the same factors that influence us influence the rest of the world as well. So far, Europe hasn't seen the kinds of housing market problems that we have except for isolated spots in the UK and Spain, but they may well see them in a bit. So far, the Asian economies have not slowed due to the oil tax or the rice tax, but they may well be slowed (although not to the levels that we are slowed) in the future. Etc.

      Curiously, to return to the theme of context which I drew from Big River's post, the rice riots worldwide and the olympic torch disturbances may be harbingers of the difficulties to come.

      Regards,

      Peter

      • 2 Replies to pddane_01929
      • There was an article in the Houston Chronicle a couple days ago, probably should have linked it. But at $20+ per 100, lots of rice is being planted on the Gulf Coast that hasn't seen activity for years. Looked at the import/export price data and petroleum imports were up 60% annually and agriculture export product prices were up over 30%.

      • "the fact that we are running out of various basic materials is a hindrance not a help."

        Peter-

        The exporting of steel by domestics has been a fascinating development, imo.

        Not too many years ago, I was in charge of finding "intergalactic" partners to deliver automated material handling systems off shore. In the domestic marketplace we supplied the systems turnkey...(more or less).

        Internationally, we didn't see much sense in building "low tech" componentry and shipping worldwide if we could teach locals to build and deliver same. We supplied engineering, software, computers, electronics, and the "high end" of the system(s).

        The whole time we worried that we were also teaching our brethren how to build our systems for themselves and developing our future competition.

        The point to my long-winded description is that the systems integration role that we assigned ourselves in the int'l marketplace (as did many others) might well be improved upon at least for the short haul.

        Small, domestic turnkey manufacturers may find it advantageous to build all their requirements locally and ship to final location for final assembly/check out. This is immensely simpler and, potentially, more profitable. (At least cost and price development would be a helluva lot easier at bid proposal time and more risk averse to boot...)

        I would suspicion that even the big guys, like Boeing, GE, etc etc will consider pulling back old fashioned manufacturing to domestic sites as well if they think the trend is possibly longer term... bwtfdik?

        It's almost enough to make me want to get back into the fray.... not.

        Best,
        Louis

 
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