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Mesabi Trust Message Board

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  • ousaouparis ousaouparis Jun 11, 2011 8:42 AM Flag

    Northshore is shipping iron ore to Canada, but not a lot...

    Up front I am not investing in foreign companies for the simple reason that I do not pay any taxes. I trade from an IRA account that is tax free, accept when dealing with a Canadian or for example STO a Norwegian company.
    In Europe Car manufacturing is the industrial sector that need steel. In France: Renault and PSA or Peugeot/Citroen. In Germany Mercedes and Volkswagen, in Italy Fiat. The manufacturing cost in western Europe is high, Renault and PSA are making more profit by producing cars in Romania and Turkey. I believe there is a little car production still in England, mostly for the right handed market, which is British.
    Poland is an important source of coal and steel. Poland has not completely moved to high tech. Russia is Russia and has all the component to stay Russian.
    In Europe the action is in the Romania, Turkey. They get the IO from Ukraine and Belorussia, although Ukraine has been banned by Exxon. All pipes manufactured from Ukraine IO may show trace of radioactivity so it is banned.
    Bottom line Europe is a mature car market, it is a replacement market not a dynamic market. The IO imports will not be enough to satisfy the North American IO market. ArcelorMittal has a steel mill in Northern France that is closed half the time.
    There is no dought that the market is in the Far East, China, Japan and India. My view is that the three Musketeers (BHP, RIO, Vale, CLF) must trade with the far East to stay alive. Brazil is the exception as they have become the prime market for South America, that produces car and O&G pipes. In this race for market share, Australia is in a strategic location with abundant IO and coal.
    CLF is the most remote IO miner of the three musketeers. Very well placed for the North American market. But its biggest client Detroit is the shadow of itself. Let's face it, steel making in the US is not welcome, it is too polluting. I do not see it regaining the preeminence it once had. With the demise of the carbon steel making, Chinese carbon steel will pick up this vacuum, in as much as I find this absurd.
    In conclusion, access to the Far East in the play CLF must find a solution to. Today a bulk carrier passage from Northshore to Qingdao is around 5 weeks (35 days), from Eastern Australia 10 days. Through the Northwest passage 15 days. (assume 750 miles per day)

 
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