Alloy Steel Inc. (fka AYSI)

[greasemonkeyshoes]

Death clock started clicking for the unprepared........

Forward looking in the world of iron ore:
"...Australian National University researcher Luke Hurst suggests this underestimates the impact the rapidly developing African iron ore industry will have on the world market.

China has been building iron ore capacity in Africa to reduce its dependence on Australia and Brazil. There are about 30 iron ore projects planned or under development across the continent.

Hurst has analysed 17 of the most developed, which are divided into 27 production expansion phases. If only the six projects already under construction or firmly locked in are developed on schedule, there would be another 31 million tonnes a year of capacity by 2018. If the 10 medium-risk ventures, including Rio Tinto's Simondou project in Guinea, are developed, there would be an additional 166 million tonnes of capacity. If all 27 projects are developed, it would add add 481 million tonnes a year of capacity by 2018, roughly the level of Australian production now. Many of these projects have low production costs and high grades....."

http://www.theaustralian.com.au/business/opinion/little-hope-in-the-long-term-for-iron-ore-prices/story-e6frg9qo-1226438059976


What's the implication on Aussie iron ore miners and its supporting industries?? And why there was no funding.Period.

Miners' capital expenditure had(happening now) to be cut and fast!! Iron ore pricing model for 2018 and beyond had to be lowered between $60-$100 per MT,assuming China can maintain its 7% growth rate. Headwinds are building for iron ore miners/supporting industries: BRAKE,de-leverage BIG TIME,CANCEL ALL EXPANSION,and FIX BALANCE-SHEET!!

Long term concern for AYSI:
Window of opportunity,once every few decades,coming to an end!! What has Gene done for the company(balance-sheet and cutting-edge product line) to weather through the next few decades?? Not very much.

Short term concern:
AYSI bloated fixed cost structure and half-pint "BIG PROJECTS," would likely spin out of control soon. I predict BK is on the horizon: within 3Q-4Q,50% chance likely.

Investor concern:
AYSI will be the "sacrificial turkey" for Gene to sink all liabilities;while he hopes the "fire-wall," will hold for his personal "BIG PROJECTS!". It just that simple,if think like a crook.