Replies to post #7625 on The Rising Influence of Rising Affluence

[DewDiligence]

To be clear: I’m not bullish on CAT’s prospects in mining; rather, I think CAT’s slowdown in sales of mining equipment signifies a somewhat lower supply of iron ore during the next few years than some investors and analysts had been counting on. This, of course, is bullish for the price of ore.

[DewDiligence]

(CLF)—CAT says worst of mining slump is over, but 2014 mining-equipment sales are nevertheless expected to be down:

http://online.wsj.com/news/articles/SB10001424052702304007504579346373470375540

Caterpillar Inc. believes the worst of the global mining slump is over… The Peoria, Ill., company has struggled over the past year as weak commodity prices force miners to retrench, sapping demand for mining equipment. Caterpillar said its sales of construction equipment and engines should increase about 5% this year, though mining-equipment sales are likely to drop 10% [relative to 2013].

For mining companies such as CLF, it’s better that CAT is forecasting negative YoY mining sales rather than growth. Less new supply coming online is better for iron-ore and coal prices. (In 2013, CAT’s sales of mining equipment fell 48% YoY.)