time for some realism, page-8

veebles

Have you ever bought a house?.
Pay $500k
earn ?????
so many years to pay it off???
All sounds a bit daunting when you just look at your debt.

Could I suggest you expand your horizons and drop a few noughts off to get some reality
Owe $1800 bucks pay $80bucks interest a year
Get $200 a year from your mainly American $ job and expect that to rise to 300 in 4 yrs.excluding 25% exchange rate shift.Plus you've just promoted yourself-produce the same get paid more(new SAG BALL)
I even suspect they are after existing customers they supply elsewhere in the world,but apparently not in the US and Canada -yet,so anticipate even greater capacity uptake on their massive expansion of capacity.
American assets worth more than debt.(House worth more than total mortgage)
Get $50 from steel in a bad year,but steel moving into stable low pricing so expect lots more than $50 bucks.
Iron ore going to cost $70 bucks over the next year to exit Southern Iron.Iron Ore likely to produce in the vicinity of $100bucks cashflow to counter this at $50US IO price on 62%FE.
ARI's capital expenditure(House maintenance and upgrade) will likely be less than $100 next year

So if steel goes back to its hayday(now all the loser businesses are mainly gone along with their yearly losses) and it instead has a $400 buck year???.
Or Iron Ore stays around $60US,then the dynamics change considerably positive.
Much like a relly visiting and leaving you $150 bucks cash the table.

Best of luck-wouldn't want to be a shorter on this stock.
Sentiment has a habit of changing rather quickly when shareprices are emotively depressed,well beyond realisable values.

The reality in the background is China still needs steel and IO to make it and is buying it in ever increasing quantities.They have been riding stocks down on the back of falling prices and a surprise drop in supply from Australia in APRIL would have upset the central planners.(just as the last drop to $80 had them scurrying to support the market)
Much of that steel will ultimately be exported tied to large infrastructure projects in Asia and Africa.
The price of IO will ultimately have to be 50% above production and sale costs for the majors,or they won't invest capital.

Balance should occur within 18 months.ARI down to rolling 12 month contracts so it can exit if the market does collapse and leave those with long term contracts to supply at a loss.Interesting two new customers NOT CHINESE,and probably hopefully willing to pay a little more for secure supply lines.

Unlike copper, gold, silver,nickel,chrome and other metals,there are no wharehouse stocks held in the name of metal exchanges for IRON ORE.Just Chinese port stocks that if not turned around from 20 days will leave mills shutting down in a severe weather event interrupting Australian supply.
The costs of damage and weeks involved in restarting blast furnaces from cold are not a risk the steel industry will take anywhere,including China.
As Vale are rumoured to have said the reduction in domestic supply in China coupled with the rundown of mill site stocks has been underestimated.
Time will tell,but ARI appears to be able to pay its bills and poke some away for debt reduction going forward.
Its given itself a 2-3yr breather,until the next big lump comes up for review.
By then they could very well have $700 in the coffers if not more.

Will it still be valued a $396 company then?

DYOR + DYODD Enough - time to earn some money to buy some more.