advice please, page-15

There are a number of things to ponder when considering the LONG TERM future prospect of BSL SP. Some are fundamentals while even stringer forces at play are prevailing market sentiments (the sorts that propelled FMG shares to $13 when the first capsize barge left Port Hedland last year).

As rightly pointed out by some, you NEVER seek advice from people on HotCopper. Some are ignorant but many are deliberately bullish or bearish (depending if they are shorting, trying to buy on a dip or waiting to sell out for a profit).

The Aussie Dollar bubble is s short term phenomena. Once the Fed merely signals a hike on the horizon if US growth gains traction, the AUD will be in the mid 80s cents range. Coupled with any local weakness in retail, credit growth and IMO (a housing bubble bursting here in Oz - we are on the threshold of the tipping point - incredibly oblivious to almost all Aussies) and the AUD will literally take a hammering as the global carry-trade in the AUD unwinds violently. All this are matters expected to take place in the next 4-6 months (NOT years).

The fortunes of BSL is tied to global demand for steel (hence global steel prices), much less related to the preformance of COLOURBOND sales here for instance. The worldwide pent up demand alone caused by the GFC is huge.

When synchronized global demand rises (in N.A, EU, PRC, JPN, KOR and increasingly in emerging markets), steel prices will again goes through the roof due to demand-supply inbalances.

The fact that BSL is range bound at around $3 (prior to Dubai) is largely due to the global recovery being barely off the ground and steel demands (despite growing forecast as well a pick up in forward orders) is still relatively weak. The short sellers worked their magic on the disappointing corporate announcements (largely rear view mirror stuff).

3-4 years from now is a very long time. While not suggesting that the stocks will again hit $12 (given the dilution). But if the next global commodity super-cycle is much stronger (given China's urbanization has barely started), a BSL SP of $10 in a frothy market in the next 3 years is not unimaginable (especially the SP by then will have factored yet more future growth in demand and prices).

Arcellor Mittal (many times the size of BSL & OST combined) is a good proxy for BSL SP. Just as BSL, Arcellor Mittal SP fell by the same margin (high 80s % from the pre-GFC peak).

BSL is a definitely a buy-and-hold IMO. As is ONE STEEL (OST) and ALUMINA (AWC).