- Mechel OAO (NYSE: MTL - News), one of the leading Russian mining and metals companies, announces that it has concluded long term contracts to supply coking coal to a number of Russian customers and expects to secure additional contracts in the future.
- Mechel has concluded agreements on supplying coking coal to major Russian steel plants for a fixed price for the third quarter of this year. Signing such agreements increases the transparency and predictability of the market, and has benefits for both coking coal producers and consumers. Currently, Mechel is considering the possibility of concluding even longer term contracts on the domestic market.
Mechel is among my favorites but that assumed they would be able to maximize profits as a freely run company. These recent news items, in my opinion, appears to be a structural change. That does not mean in the long run this company won't prosper or in fact this is a small bump in the road - I could be misreading it. But with the chart breaking down and with what appears to be a material change in my outlook, I am going to stand to the side for now until the smoke clears. Again, for all I know I might be selling at the bottom but I don't want to hemorrhage money and better safe than sorry - I always would rather give up potential gains than kiss away capital. Even with my "favorites" - no room for emotions in the stock market. Perhaps *I* am marking the bottom with my sell, being one of the biggest bulls in this name, or "all the bad news" is now priced in. Even if they drop from 60% growth to 30% growth, this is still a sub 10 PE stock. We can always buy back at a higher price once things clear up. For all I know that could be tomorrow if the chart improves.We've owned Mechel since Nov 5, 2007 and despite the recent demolishing of the stock price walk away with a $18,000 profit. We're selling at the ridiculous price of $37.50s.
No position
3 comments:
Hey Mark,
What's up with the action in these coal names recently? With oil dropping, doesn't that mean the global economy is going to be fine and demand for coal should stay high? What's wrong with that thinking?
One could argue that. Lower oil would lead to less chance of global recession which should be positive for other commodities.
But in the financial world its just "one big trade"
Commodities (the monolith) are either good or bad. All of them. The past week and a half they are all bad. No matter the logic. It really is as simple as that. I wish I could give you some great detailed explanation - as they say K.I.S.S. The market is nothing if not simplistic in its thinking most of the time.
Commodities = bad
Early cycle stocks = good
check out those airlines up 50-70% yesterday for example. All on oil dropping $3? :)
http://tinyurl.com/66hc3u
Some news on CLF. Looks like to me like management is preparing for a CO2 cap and trade system. If so, would be very benificial in a few years.
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