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rffrydr
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 Posted: Tue Apr 03, 2012 7:33 pm Post subject: |
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Big putsch on liberalizing capital account/structure on the Bloomie: any move toward free movement of capital and currency will suck the life out of this engergy intensive "export."
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HenryTo
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Joined: 06 Aug 2004
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Location: Los Angeles, California
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| Posted: Tue Apr 03, 2012 3:30 pm Post subject: |
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Morningstar on ACH's offer on SouthGobi Resources.
| Quote: | | Aluminum Corporation of China ACH made a CAD 925 million offer Monday to buy as much as a 60% stake in Mongolian metallurgical coal miner SouthGobi Resources, with its largest shareholder, Ivanhoe Mines, planning to tender its entire 58% stake. The purchase price values the company at $2 per ton of resources, which does not seem expensive relative to other recent metallurgical coal transactions, namely Peabody's BTU 2011 purchase of Macarthur Coal. However we question the decision to invest in an industry and country in which Chalco has no operational experience. Management previously outlined its intention to diversify its earnings stream and reduce its dependence on its core business, aluminum, and this is its most significant step toward executing that strategy. We acknowledged that Chalco's competitive position in China's aluminum sector has weakened when we downgraded Chalco's economic moat rating to none from narrow. Yet we see no strategic rationale outside earnings diversification, and the outlook for the metallurgical coal sector doesn't compare favorably with aluminum, in our view. Therefore, our view of the transaction hinges heavily on the valuation. The offer price of CAD 8.48 per share represents a 28% premium to Friday's close but is more than 50% below SouthGobi's peak trading level in early 2011. In the past year, most coal miners have s uffered similar declines as seaborne met coal prices have fallen 40% because of the recovery of Australian production following last year's weather disruptions and a slowdown in Chinese demand for this key steelmaking ingredient. However, unlike most global met coal miners, whose near-term profit potential is unlikely to exceed that of 2011, Mongolia is in a better strategic position and SouthGobi might have further margin expansion in store, which could make Chalco's bid even more attractive. SouthGobi said in March that prices at the Mongolia-China border remain at or near all-time highs, with cross-border shipping rates running 25%-50% higher than a year ago. The company has guided to $60-$70 per ton profit after total operating cash costs in 2014-15, compared with its record $30 per ton in 2011. We are skeptical of this lofty target, but proximity to China is SouthGobi's primary advantage, and improved rail transportation and new coal transport gates could significantly lower transportation costs over the next few years. Even if SouthGobi is only able to maintain 2011's $30 per ton spread between selling prices and cash costs in the next few years, we think Chalco is still getting a decent price. |
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rffrydr
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| Posted: Wed Mar 02, 2011 9:58 am Post subject: |
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Labor costs not much...but environmental costs are going to keep this machine where it is.
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rffrydr
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rffrydr
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| Posted: Tue Jul 06, 2010 11:29 am Post subject: |
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rffrydr
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| Posted: Sat May 22, 2010 7:10 pm Post subject: |
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Gonna turn back the clock to net (big) exporter next year. Just in time for the new CAFE standards....which is begging for aluminum.
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rffrydr
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| Posted: Wed Apr 28, 2010 7:41 am Post subject: |
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The mighty shipping industry--and chinese monetary policy:
Marc Chandler
China
4/28/2010 8:58 AM EDT
| Quote: | | The big Asian story comes from China. The PBOC stated that Chinese banks need to raise more capital, utilizing an array of fund raising channels. The loose monetary policy saw a record lending of 9.6 trillion yuan in 2009, with an additional 7.5 trillion this year. According to the PBOC this effort will "increase commercial banks' capacity to absorb risk and to safeguard financial stability." The report underscores that the PBOC will continue their current "pro-growth" status. I maintain a rate shift will happen later rather than sooner. Only 25% of the value of the goods Chinese exports to the United States is value that has been added in China, which will be impacted by a currency shift. 50% is incurred locally (locally being China) via shipping, storage, and markups. The remaining 25% is imports of the raw goods. |
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rffrydr
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| Posted: Thu Apr 22, 2010 8:20 am Post subject: |
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rffrydr
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| Posted: Tue Apr 20, 2010 7:10 am Post subject: |
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Well here it is at long last: US may launch an investigation into China subsidizing the export of aluminum.
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rffrydr
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rffrydr
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| Posted: Mon Nov 23, 2009 6:58 am Post subject: |
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The currency effect continues:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aC.gmVbb_TBg&pos=5
Unlike the Ag commodiites this stuff can and will be stored, costs of carry being next to nothing. More than anything else but crude this commodity represents the storage of energy (yangtze dam) and can be stacked high. A sustained dollar recovery will put a different complexion on this pile but for now production is just a by-product.
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rffrydr
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| Posted: Wed Aug 26, 2009 1:51 pm Post subject: |
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The Aluminum Corp of China, warned that Chinese smelters, traders and warehouses hold as much as 600,000 metric tons of inventories because of excess production. The Shanghai Futures Exchange warehouse holdings are about a third of that. The extent to which this stockpile represent "currency" rather than "production" is what still has to be priced. 
Chinese imports:
Nov. 2008: 54.48
Dec. 2008: 68.90
Jan. 2009: 56.36
Feb. 2009: 60.07
Mar. 2009: 147.18
Apr. 2009: 439.90
May 2009: 331.74
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rffrydr
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rffrydr
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| Posted: Thu Jan 15, 2009 9:02 am Post subject: |
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Aluminum stocks in Japan hit a three year high in December.
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rffrydr
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| Posted: Thu Oct 16, 2008 4:12 pm Post subject: |
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Alcoa cutting production ASAP in face of china two-million-T capacity boost next year. Look to trade down to marginal cost at least, 86cent/lb vs. 97 now.
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