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Strategies & Market Trends : Ride the Tiger with CD

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To: Boolish who wrote (201005)	7/18/2011 10:15:30 AM
From: Terry Maloney	Read Replies (1) of 313057

ORT is flirting with the PP price of 3.20 this morning. Got any feel for what's going on there? btw, this is from their revised white paper ... >>Orbite’s primary SGA customers will be Quebec’s ten aluminum smelters. They will be able to source locally-produced high quality smelter grade alumina, accessed through barge transport from St. Lawrence River ports, rather than relying on ocean transport of alumina of uncertain quality over distances of thousands of kilometres. This will result in significant competitive advantage. The cost of ocean transport to Quebec is sensitive to rising fuel costs, and can reach 15% of FOB alumina price. As alumina represents 40% of the production cost of aluminum, it follows that the substitution of local Orbite alumina, unburdened by transportation costs, could add 6% to the bottom line of Orbite’s customers. According to Citigroup Investment Research, earnings (EBITDA) of the aluminum smelting industry average 25% of revenue; therefore, the adoption of Orbite alumina by Quebec’s aluminum smelters could increase their earnings by a remarkable 24%.<< I'm not smart enough to verify those numbers, but they sound good ... still unclear on the port issue.

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