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Hot Rumors and Forged Deals in Steel ... + a Dry Bulk IPO

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March 11, 2010 – Comments (0)

Quite a flurry of news hitting the domestic steel wires over recent days:

http://www.fool.com/investing/general/2010/03/11/hot-rumors-and-forged-deals-in-steel.aspx

"One could feel the excitement start to build last week when Nucor (NYSE: NUE) scored a joint venture with the U.S. subsidiary of Japanese conglomerate Mitsui. The entity thus created, called NuMit, targets investments in steel-related assets worldwide … but its inaugural asset is Mitsui's Steel Technologies. Nucor now holds a 50% stake in Steel Technologies, which operates 23 processing facilities for flat-rolled steel products throughout North America with $1 billion in annual sales. Nucor's planned construction of a similar processing facility in Mexico will now be executed through this joint venture."

"Another slice of Steel Dynamic's optimistic pie comes in the form of a recently implemented capacity to produce enormous lengths of railroad tracks. We all know what Warren Buffett thinks of the long-term outlook for American railroads, and Steel Dynamics is now well positioned for a build-out in railroad infrastructure with a facility that can efficiently produce 1,600-foot lengths of "continuously welded rail." Although the company continues to note pronounced weakness within structural steel and some value-added product lines, this new rail facility has enjoyed a "dramatic increase in orders for welded rail.""

"I have documented several of the long-term fundamental drivers that are conjoining to send prices for iron ore and coking coal substantially higher going forward. While I agree that vertical integration up the material supply chain presents an important buffer against such profitability constraints, I continue to view the adaptability to market dynamics inherent in the arc-furnace operators and a potential surge in scrap metal supply from programs like Cash for Appliances as compelling equalizing factors. Since I believe that margins are likely to remain tight for all domestic operators, I continue to highlight Nucor as the best in the business. With its celebrated corporate culture, well received market insight, and an exciting new joint venture that could open doors to key foreign markets, Nucor still strikes this Fool as the hottest name in domestic steel."

Please visit the link above to read the whole article.

 

And while you're at it, have a look at my coverage of Baltic Trading's IPO

http://www.fool.com/investing/international/2010/03/11/expect-a-rough-ride-on-the-baltic-sea.aspx

"Like the Sea Shepherd's crew before she rams a Japanese whaler, the world's dry bulk shipping industry continues to brace for impact."  :P

"Some brave Fools will no doubt climb aboard Baltic Trading as it gets under way, but I believe they must be prepared for the kind of near-term uncertainty that has characterized the likes of DryShips and Excel Maritime Carriers (NYSE: EXM). Unlike those heavily debt-laden operators, however, Baltic Trading embarks with a clean slate. Set a course for adventure: destination unknown."

Did you know that almost every article mentioned in that article is a Mashall Islands-registered company? I figured they would all be under a flag of convenience, but was surprised to find they are all with the same one. A little TMFSinch trivia for you: I used to work for the Marshall Islands registry investigating incidents with vessels in that fleet. That was some 20 years ago now ... crazy how time flies!

 

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