US Steel [X] Swing Trade

[ducati998]

With the extensive flooding in Australia, the Chinese Steel manufacturers will have difficulty in securing adequate supply of coal to drive the furnaces.

China accounts for a high % of world steel production:

China 52,535 50,357 54,968 55,403 56,143 53,766 51,743 51,636 47,945 50,304 50,173 51,524 626,654 [total for year]

As can also be gleaned from the chart, this is about 50% of total steel production. Thus, should Chinese steel production be impacted from the floods that have essentially ended Australian coal production, US Steel may well be in a position to pick up market share. The US is a huge reservoir of coal, right on US Steel's doorstep.

The chart also provides a nicely delineated trade set-up. I went long the shares myself on Friday. US Steel reports earnings on Tuesday next week: they are likely to report losses. This has been true of the last 4 reporting periods.

Commodities [steel] benefit however from the inflationary monetary policies of the Federal Reserve and Fiscal deficits of the Treasury.

jog on
duc

 

[ducati998]

Some additional photo's showing the devastation in Australian mining.

 

[ducati998]

An additional swing trade:

SHLD

No particular reason for the trade other than the set-up.

jog on
duc

 

[ducati998]

With the global recovery still in its early stages, those moves could accelerate. Higher raw material prices, especially coal and iron ore, are pushing up steel prices across the globe. Steelmakers including AK Steel and Nucor in the U.S., and China’s Baosteel and South Korea’s Posco—the world’s second and third largest—have been steadily increasing prices in recent weeks. The world average carbon-steel price is forecast to exceed $1,000 per metric ton by the second half of 2011, up from an average $733 last year, according to U.K.-based consultancy MEPS . . .

Lovely entry for a swing trade this morning.



jog on
duc

 

[ducati998]

Update,

The $60 area is a short-term resistance point for X. This is where the last rally stalled also. For those not inclined for any possible pullback, this is the point to take profits.

jog on
duc

 

[ducati998]

Sell SHLD to close trade

Trade returned circa +20%

jog on
duc

 

[ducati998]

US Steel looking to break out of recent range:

jog on
duc