|
|
|
|
October 8, 2009 Dear Friend,
We updated our global
aluminum demand supply-balance based on a relatively generous
11.4% demand gain in 2010 and 5%-6% CAGR in 2011-15.
We estimate a 78.8% global operating rate in 2010 and continued
high inventory levels slightly above recent peaks. We cannot
derive a tight aluminum market unless the CAGR of aluminum
demand is about 1.5% larger than we estimated.
We were not impressed at
Aloca's $0.08 profit reported last night, which greatly resembed
the $0.07 loss we estiamated three months ago at $0.70 LME spot
prices excluding $0.08 in LIFO and $0.09 per share in capital
gains. We estimate third-quarter costs rose $0.03-$0.05 per lb
due to the weaker dollar and appreciation fo production cost
currencies.
While we raised our LME ingot
price forecast another $0.05 per lb due to the $0.82 average
seen in 3Q and our Alcoa estimates slightly, we remain at
Underweight for all aluminum shares.
We attached our November
18-19 conference agenda for your RSVP and one-on-one requests.
Separately, yesterday
Brazil's Eike Batista disclosed he raised his stake in Ventana
Gold to 17.5% from 12.3%, and Pan-American Silver founder Ross
Beaty holds another 10% or so. Ventana Gold and adjoining
neighbors Greystar Resources and Galway Resources in the
California-Vetas district of Colombia have been among the best
performing gold shares in the past 90 days. Ventana and Galway
will speak November 19th and Greystar at our next March 25-26,
2010 conference.
Faithfully,
John C. Tumazos
|
Copyright © 2008 John Tumazos Very Independent Research,
LLC
|
