A concerning aspect is that he sees strong medium long term growth in China. Yeah, so do I, but not in the steel game. Look at what China has built and gone through over the last 10 years. They won't need to grow like that for a while. They built their infrastructure (ie, the cities that are unoccupied) and now internal consumption will drive growth (ie, insurance, finance, retail, services). The economy has made the shift. The western banks' Chinese economist almost entirely agree to this (ie, Citi, morgans, etc).
I think the Caltex model is probably not a bad one. The only thing to consider would be the logistic costs. But wages, land, operating costs, etc, suggest the 'import, add margin, sell' model would probably be better. Then ARI could shut down the sites, and once land is de-toxed, could develop it or sell it.
I actually didnt realised the steel division of ARI was also currently loss making. So where are they making profits?
I still see this as a buy <20c.
ARI Price at posting:
23.0¢ Sentiment: Hold Disclosure: Not Held
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