I am betting that Asia - Pacific and Wabush are gone and a JV will be formed with BL and the Ring of Fire. Also debt will be reduced to $1.5 billion where CLF was at their peak. All of this activity will drive the short interest down.
By the end of Q3, their inventories should be at $430 million to carry into winter months. This means CLF needs to trim $230 million of inventories now by cutting production. Steel companies could purchase more inventories heading into winter to reduce the amount CLF needs to maintain. CLF could easily add a total of $300 million in cash that could be used to pay down the revolving credit line.
Asset sales will move the market but CLF can get a huge cash gain by just selling off half of their huge inventory on hand. Easily put $300 to $400 million in cash!
Good to see you are back. Noticed DaLian futures were up, will help the whole "fix cliffs" process.
Looks like it passed. Please read article 16, amendment and discontinuation. Maybe Casablanca's board members can put a stop to the package before it starts.
From the AISI:
"In the week ending August 2, 2014, domestic raw steel production was 1,901,000 net tons while the capability utilization rate was 79.0 percent. Production was 1,856,000 net tons in the week ending August 2, 2013, while the capability utilization then was 77.4 percent. The current week production represents a 2.4 percent increase from the same period in the previous year. Production for the week ending August 2, 2014 is down 1.0 percent from the previous week ending July 26, 2014 when production was 1,920,000 net tons and the rate of capability utilization was 79.8 percent.
Adjusted year-to-date production through August 2, 2014 was 56,448 net tons, at a capability utilization rate of 76.8 percent. That is up 0.4 percent from the 56,242 net tons during the same period last year, when the capability utilization rate was 76.8 percent"
As you can see, week over week production was down 1% but year to date, production is continuing to grow over last year.
When you look at West Texas Crude, the lower price limit is set by the cost to produce oil from N. Dakota. Once it reaches the $90 a barrel price, fracking slows, supply growth slows and the price of oil nudges back up to $100.
Sorry to see you go, we have learned a lot about the coal industry from you. I used to walk with a retired mining engineer turned general council for a major coal operation. He told me several years ago that thermal coal was going to decline with EPA requirements and competition from nat gas. However, he said that there is no real viable alternative to met coal as nat gas and electric furnaces require a special iron ore pellet to operate. Also met coal supplies are very limited and steel companies need to secure long term supplies. He went on to explain that India will require huge amounts of met coal imports to meet their future steel production requirements (and that was 5 years ago he was telling me that). And China would continue to grow which he was very familiar with since he helped China develop their coal industry.
Bottom line, if you want to be in the coal industry, be in the ones that have a dominate met coal business.
According to SEC filings, many of CLF's management was awarded stock. Find it interesting than none of them have sold those positions. Guess they believe in the direction the company is headed.
Day traders play with this stock, taking 20 cent gains. Need to have the proxy vote results and then news activity will pick up. Right now, no one knows who to deal with.
Exactly what I said earlier, cash is strong, long term debt not due for a few years.
So they are talking about US Steel and how lower iron ore prices are good for US Steel… well I guess no one there understands that US Steel owns iron ore mines and produce most of their needs. Matter of fact, US Steel is one of the largest iron ore producers in the US.
US Steel is up on higher steel prices and demand. Iron ore will follow as this demand will put pressure on prices for all the inputs such as iron ore and met coal.
In fairness, all those proxies floating around and all those people that voted more than once, they have to verify which was the last proxy signed by visually examining the signature and date. Plus CLF management must have hired the same people that counted George Bush's Florida results.