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Short US Steel Maker

  1. Even Toyota could not pump US auto sale!

    All three big US auto makers are cutting back production dramatically. They didn't expect the market goes so bad so quickly.

    They will cancel orders, with ore price skyrocketing, demand shrinking, US steel maker are the next to the toilet.
     
  2. Long STLD AKS X RS ZEUS
     
  3. I just went long a base metal miner. Steel companies have shown an excellent ability to pass on the rising cost of raw materials to their customers.

    Steel demand remains strong even in this enviornment of restrictive credit.
     
  4. Short X



    :D



    going down...

    $163.75


    6 months price target


    $100-$115
     

  5. You have to understand how far you can pass costs onto the consumers, that can only last so long before the consumer tires out.

    A friend of mine who in the last month alone has seen his shipping costs rise to rates that even he cannot comprehend. He told me one of his delivery charges is up 200% from where it used to be, other places that werent charging for shipping have now even passed this on to the customer.

    You can only pass so much on to the consumer. X will see demand fall and stock price will fall as well.
     
  6. I share the same concerns, largely because of rapidly expanding production capacity in the steel industry. This is the reason I didn't invest directly into a steel maker, but looked for an investment that would benefit from increased steel production.

    I still see strong demand in the near future however, as government issued debt from the BRIC share increased ratings and more money seems to be spend on infrastructure by those governments. I think that increased steel prices will be the downfall of US carmakers and alot of construction contracters and not vice versa.
     
  7. ^the above is correct. U.S. automakers are price takers, not price makers in steel.
     
  8. incredible price movement in X today
     
  9. Bloomberg: "Aditya Mittal Says ArcelorMittal to Raise Prices in U.S."
     
  10. This is the bottom for steel stocks - you should be buying not selling.

    Through the 90s the industry was depressed courtesy low cost steel from poland and the ukraine. That excess supply has been taken out of the Market.

    The input costs (iron ore, energy) have doubled, so they pass the costs on directly. NO one in this industry has long term contracts. Therefore, they will all have to price these ongoing cost increases into their jobs.

    If you work in fabricating, which I do, there is a 10 day window to quote all jobs and you put that in your quote- you get a p.o and place your steel order asap otherwise the price goes up and they do not guarantee your price past 10 days.

    All the fundamentals aside- do you want to bet against a guy (Heebner or Gendell) who owns $500 million in US Steel stock (Gendell in this case) or Heebner, who has made 40% a year for the last 5 years in a multi billion dollar mutual fund (CGM Focus)?

    You could argue the steel stocks were overbought in May (which I did), and that was true until yesterday.


    Now they are a screaming buy.

    In short - its called inflation.
     
  11. the only winner in my portfolio has been a steel company. GSI
     
  12. Trading at

    $148.50


    DOWN over 8% since I said short.
     
  13. new intraday lows at $143.50.


    Down $20 from my call and probably going down alot further.
     
  14. Said short or went short?

    I am still long from $157.75.
     

  15. Why didnt you sell it at $160+
     
  16. Not getting a sell signal yet. Will sell when my system takes me out of the trade. Also long SCHN RS ZEUS NNBR.

    So are you short X or just making calls again and paper trading?
     


  17. I am NOT short X, I do not short, I buy the inverse ETFS like SMN, DUG, DEE and DTO.
     
  18. Closed out most of my steel/material longs with losses the past 2 weeks. Congrats to all shorts. Still long ZEUS GNA X. Selling X tomorrow at a loss, holding ZEUS and GNA but will likely also have to exit soon.
     



  19. WOW that came quick, nearly lost 50% of its value alot quicker than I thought. Might be a buying opportunity.