Reality appears to be out the window.
Even ARI's charted forecasts from 2011/1012 had the price falling in 2013 to around a $80 ongoing trend.
Either they became caught up in market hype,or knew the coming fall was inevitable.Probably what they didn't count on was FMG ramping up so high and the use of autonomous vehicles and trains by the big players and the extra productive squeeze that put on their ability to ramp-up and overproduce with existing infrastructure,by squeezing down turnaround times,of everything including trains and unloaders.
Steels was running cash positive as was recycling although those sums are a pittance.
The last steel visit indicated sales were up by the look of it around 20% since June,on a monthly basis,since then,so maybe its steels turn to shine in a low exchange environment.
When your spending around $400m on capital expenditure,it wouldn't surprise me to see debt rising in the $100-300m by December,if mining is also just recycling cash within itself as you could imagine it doing now.
So the question becomes,HOW IS CONSUMABLES DOING?
I'd pick the $100-$115m plus first half,based on last half was $87 with 20kt less media compliments Indonesia tax,which is now history and volumes their back to normal we are told.(A hit of $15m off EBIT last half) otherwise would have been $102m which also included $15m redundancies at Warratah,which should add $7m to 6 monthly profits.Say $109m
and expansions in Sth America should relieve pressure on plants running at full capacity,likely trans-shipping to meet demands,so take a stab and say another $5m just on increased volumes takes it to a possible $115m to December.
The one side effect of everyone running trains harder and mining more,is ARI gets to provide the big 3 doing so with their crushing media,rail wheels and rail for repairs,their belt haul ropes, and when plant starts running on the margins speed wise quality of those products can't be suspect,so MOLY COP will be copping even more business,from ancillary supplies.Cheap unproven alternatives,won't get a look in.
Once Kamloops 140kt expanded and ramped up,then Alta Steel can exit the reinforcing market and move up he value chain 100% supplying MOLY COP's new ball feed.
DYOR + DYODD bought at 34c and that was a bargain.Wrong time of the year to look for more free cash to invest.Waiting to see what ARI does now Newcastle Consumable steel demand is lower.I feel general increased steel demand will make steel JUMP in the income stakes if not now,very soon.150kt capacity waiting at marginal cost.
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