Production downgrade looks clearly linked to the weather. We are coming out of an La Nina and heading into an El Nino. Hence I view weather as a temporary factor. I did take a nibble at $4.05. Price reaction did look out of whack, positioning into the report did hope for more e.g. Goldman raised to buy a couple of weeks ago.
Bullish factors: - Broad underinvestment in capex across many commodities. I want to be positioned here when cycle turns. - Diversified miner with no iron ore exposure - Buyback in place - Low cost producer - Healthy cash flows and low net debt - Some of the inflationary factors that are impacting costs seem to be moderating.
Bearish factors: - Commodity prices still heavily influenced by China. The reopening has seemed to benefited the services sector more than manufacturing / infrastructure. - Eventual carbon pricing (alumina / aluminum) is intensive. - Ultimately commodity businesses are cyclical, it might be early in the downgrade cycle
S32 Price at posting:
$4.12 Sentiment: Buy Disclosure: Held
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