Hweb, re NGA. This is the key element in your argument for NGA:
"if they are successful in passing along those increases.."
The economy was very strong in Q1 but we are seeing some signs of weakening in Q2. Even NGA seems to think that they will have some difficulty maintaining price increases:
"Commenting further, Mr. Evans said, "First quarter volume improvement reflects the increase in capital goods spending and general improvement in the economy. Additionally, our employees' focus on customer service and quality is showing positive results. However, with continuing increases in zinc pricing, the market could react by substituting other corrosion protection alternatives, such as paint, or by postponing projects. The Company cannot be assured that continuing zinc price increases will be absorbed by the market."
I think a safer play is the zinc producers, if one was inclined to invest in this area. NGA appears to be involved in the production of steel products:
"North American Galvanizing is a leading provider of hot-dip galvanizing and coatings for corrosion protection of fabricated steel products. The Company conducts its galvanizing and coating business through a network of plants located in Canton, Ohio; Denver, Hurst (Dallas/Forth Worth), Houston, Kansas City, Louisville, Nashville, St. Louis and the Tulsa area. Hot-dip galvanizing provides metals corrosion protection for many product applications used in commercial, construction and industrial markets.
If anyone is going to get squeezed first, my guess is it will probably be these kinds of companies in the middle...
AI
