Bloomberg:- 1) It was in mid-September when Lloyd Blankfein, the...

Bloomberg:-
1) It was in mid-September when Lloyd Blankfein, the former CEO of Goldman Sachs Group Inc., suggested investing in commodities was "not a bad thing." Prices for most materials were just below the pandemic lows, and the asset class was still the ugly duckling. It was a while before Wall Street realized a bull market in commodities was taking shape. The call for a rally came mostly in late the year and early 2021, but Blankfein had silently called them at a virtual event on September 16 that focused on metals and was organized by CME Group Inc."From an inflation perspective, as an investor, I think that right now it is not a bad thing to invest in material sectors while they are underestimated,"-

2) Fast forward four months and raw materials are rising. Goldman Sachs, Bank of America Corp. and Ospraie Management LLC have all called for a bull market as momentum and vaccines help the world get out of the coronavirus crisis. JPMorgan Chase & Co. has also joined the chorus in advising customers to increase their exposure to materials.-

3) Commodities haven't been this sexy since the mid-2000s, when China stocked everything from copper to cotton. The scene looks similar now, with broad levels of commodity prices hitting their highest levels in six years.You suddenly have the whole world looking at the commodities market.

4) Speculators are piling up now. Hedge fund bets on rising prices are near the highest since at least 2011 and are valued at nearly $ 120 billion. The face value of bullish bets on commodities has risen by more than $ 30 billion. -

5) The introduction of the vaccine, the potential pickup in demand and a weakening dollar brings commodities back, just as investors wonder how much more stocks could go up. The view is that the dollar is going to be pretty weak in the long run. When the dollar gets cheap, you have to buy something. This usually leads to higher raw material prices. "

OMH: Bullish outlook
1) Against the backdrop of a bullish commodity sector, it is not surprising that the Ferroalloy prices have also risen by between 30-40% from its recent low. At the current ferroalloy prices (FeSi at $1,300-1,400 /mt), we are back to the 2018 level when OMH was making A$160m profit.

2) But if you look at the current price of A$0.76, it is still >50% below its high of A$1.70 in 2018. In term of PE it is still trading at rock bottom PE of 3-5X FYE2021/2022. This is sharp contrast to market peers PE, and it is especially so when you compare with Press Metal at PE 72x.

3) OMH is still in its initial stage of price surge. Whoever is selling / shorting now will face with much high price to cover later. I noted there was a block selling/shorting at $0.77-79 last week, but may not hold much longer. It will be painful for any shorters in an upmarket for a commodity stock like OMH that is way unvalued with its net profit expected to skyrocket in the coming months. It will be even more painful in the next few months if they continue to bet against the rising tide.