cash is cash. How much interest do they pay on a stock offering and how much interest do they save using to pay down debt on a discount? Net - net, they come out on top.
They have serviced their debt during the lowest prices for iron ore and when their debt was a billion dollars more than it is today. With iron ore prices higher and their debt lower, what makes you think they can't service the debt now? Have they ever missed an interest payment? Do they continue to pay down debt? Their current debt is totally manageable as LG has said many times.
The real value of these boards come from people the provide us with breaking news and information. Then they can offer us their opinions on their findings. But the post like song's here in this thread off just their opinion which is totally worthless to us.
CLF has cash coming in from several directions such as tax refunds, settlements and closing of asset sales. All they are doing is using the ABL to invest into the future and pay it off as the cash comes in. Truth is they are better off developing a new market with several buyers than developing a market for one major player that expects a major discount on the finished product.
Interesting, so even you take a naked short position, you cannot be hung out to dry.
Chinese just can't keep it going. Spoke with a metal roofing company yesterday and they can't keep up with the rising metal prices.
Yes, CLF's market is growing. Iron out of Canada needs to sell for $100 in order to pay all the taxes, fees to First Nations and the high cost of transportation. With companies like CLF that have cut their cost of production so much, it is doubtful we will see $100 iron ore for a long time. So companies like MT are cutting production of their Canadian operations and increasing the amount they are buying from CLF. Same thing applies to a company like AKS and their failed relationship with Magentation. I would not be surprised if US Steel increase their purchases from CLF as well.
I see a lot of construction sites every day and have noticed a shift from Ford to GM, Dodge and Toyota. Could be these truck buyers don't like the aluminum bodies, or it could be as simple as they don't like paying extra for that feature. Most buyers want comfort and performance features for their money than aluminum bodies. Just like home buyers, they could care less about what is behind the drywall, they go for the extra trim and features they can see.
I know most people in construction are going to GM and Dodge because of the aluminum. Ford's market is the white collar construction wannabes. People in construction want strength and power. These white collar construction wannabes just want to pick up chicks in a bar.
You are correct, with income and tax advantage, their debt is totally manageable and will be paid off before the bonds are due. As their cash generation continues to grow, the interest rate on this debt will decrease which will give CLF more cash to pay off debt. We may even see CLF buy back shares.
Look at the nonresidential chart provided by ABC:
Spending is still near yearly highs. This guy really knows how to bend the numbers!
Better than down 2 cents... thanks for the update. Do you have access to the prices of US iron ore pellets?
From the AISTech 2015 Summary
"Declining iron ore quality is being improved from the mines through to pellet binders. DRI shipped tonnage today exceeds that of HBI The greater carbon (chemical) energy efficiency of DRI’s in-situ carbon can significantly alter the VIU of DRI. Site specific VIU should consider ability to handle high %C (deC tools, OGS), use of low oxide load (gangue) DRI/HBI (organic binders) and (long-term) charge pre-heating to reduce operating costs. As standard operating procedures (SOPs) are altered to accommodate DRI use, the benefits and VIU of DRI will be maximized and detriment to the EAF operations minimized. EAF optimization will be site specific, balancing VIU of DRI and metallics with SOPs The VIU of DRI burdens changes significantly with price. With the advent of cheap North American shale gas and the drive to invest in new DRI plants, a long term quality metallics supply can be guaranteed. DRI use will be grow as the “price will be right”!. Combining VIU, DRI specific SOPs, educated use of DRI will allow mills to produce low cost liquid steel as effectively as scrap charges. "
From the Cargo Handbook where HBI is classified type A DRI where DRI requirements apply and specifically type A:
"All types of DRI
Fines are now defined as particles up to 6,35 mm in size.
The carrier’s representative is to have reasonable access to stockpiles and loading installations for inspection.
The cargo temperatures are to be monitored during loading and recorded in a log.
The ship shall be provided with a detector suitable for measuring hydrogen in an oxygen depleted atmosphere and for use in a flammable atmosphere.
Cargo temperatures and hydrogen concentrations in hold atmospheres are to be monitored on voyage.
The hydrogen concentration is to be measured in holds prior to opening hatch covers.
All records of measurements are to be retained on board for two years
DRI (A), Briquettes, hot-moulded
The maximum limit on the moisture content is 1%
The cargo is to comprise essentially whole briquettes.
Surface ventilation only shall be conducted as necessary. When mechanical ventilation is used, the fans shall be certified as explosion-proof and shall prevent spark generation. Wire mesh guards shall be fitted over inlet and outlet ventilation openings."
It is expensive to ship these and tend to serve the immediate markets. These have been around for a long time, same logistics problems exist.