Stock Price
RE: “Why is this stock tanking?”
To answer that question, it is important to keep in mind that there are more than a few dim wits who own this stock. A goodly number of those dim wits are probably hedge fund managers. They, as a group, are overly impressed with their “superior” knowledge of the world. In this particular instance, they are acting on an absurdly unimportant item of news (as reported by Resource Investor, below.)
Keep in mind, those supremely intelligent hedge fund managers are aware that molybdenum, and thus, Mercator Minerals, is leveraged to the steel industry. So when a news item like this come along, there is a knee jerk reaction.
The foolishness of their ways is almost humorous. While the headline creates the impression that steel output in China is down, the truth is actually quite the opposite. It is only the rate of growth that has declined. “Steel product output stood at 300 million tons for the first half of this year, up 12.5% year-on-year.”
There is also a second reason for the nervous Nellie’s to sell. It is their imperfect understanding of
metallurgical risk at Mineral Park, which is virtually non-existent. But, there is a long history of less
worthy projects that suggest to them that this risk is very real. They look at the abject failures like
Constellation Copper, and Frontera Copper Corporation, and they imagine that outcomes such as
these are typical. And in fact, that is probably close to the truth.
But the pedigree of Mineral Park, with its 16 years of successful milling production in the past, elevates this project to one
of the few World Class projects that will come on line this year. Successful World Class project are rare, especially so when
they are brought in without the assistance of a major producer. So rare, in fact, that these foolish sellers can be understood
for their ignorance.
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From Resource Investor:
China's steel output growth slides in the first half 2008
By Interfax China
17 Jul 2008 at 11:03 AM GMT-04:00
https://www.resourceinvestor.com/pebble.asp?
HONG KONG (Interfax-China) -- China produced 263 million tons of crude steel in the first six months of 2008, up 9.6% year-on-year, though the growth rate came in 9.3 percentage points below that recorded for the same period last year, the National Bureau of Statistics reported on July 17.
Steel product output stood at 300 million tons for the first half of this year, up 12.5% year-on-year. The annual growth rate for steel product output showed a similar drop, of 11.4 percentage points, when compared to growth last year.
The NBS said the slowdown in steel product output growth was due mainly to production cuts by small steel mills that cannot afford rising iron ore and coke prices. The growth has also been hedged by falling steel products exports, after the government raised taxes on exports for most steel products to between 10-15% at the beginning of this year.
However, steel product consumption rose strongly between January and June, leading steel product prices to jump sharply over the period. China's steel product consumption rose 16.7% year-on-year while the price of wire, which makes up a significant proportion of steel products made in the country, stood at RMB 5,777 ($845.83) per ton by the end of June, up 62.4% year-on-year.
Rising steel product prices in first half of this year have allowed domestic steel mills to turn a profit of RMB 97.09 billion ($14.22 billion) over the six months, up 25.6% year-on-year, according to the NBS.
The report also predicted that prices for steel product will remain strong in the second half of this year, as reconstruction work in the wake of January and February's snowstorms and the May 12 earthquake will increase demand for steel products. Slowing production and rising production costs will continue to support steel product prices into the remaining months of the year, the NBS said.