Alloy Steel Inc. (fka AYSI)

[DaveinHackensack]

Volume of iron ore more important than price

The two are related, of course, but it's worth bearing in mind the difference. For a commodity producer, price and volume of the commodity are both key. But for a picks & shovels play, the volume is the key. That point as made a few years ago by the CEO of a conveyor belt company, as I noted in a blog post at the time ( http://thehackensack.blogspot.com/2008/12/alloy-steels-annual-report.html ):

"Conveyer belts carry materials based on volume and tonnage. If you are producing a commodity, we are driven by volume, not its price,” says Mark Abrahams, chief executive of Fenner."

The volume of iron ore produced by Vale, Rio Tinto, BHP, etc., not its price, will determine the rate of wear of their equipment, and their needs for new wear plates.