Industrial Production BTE as well:
- May Industrial Production: +0.4% to 109.6 +0.2% consensus, -0.4% prior (revised).
- Capacity Utilization 78.1% vs. 78.0% consensus, 77.9% prior (revised).
CLF is still pretty cheap at $9.66:
- Dalian iron ore futures ripped to a new record and wrapped up their biggest weekly gain since February, raised by expectations of sustained tightness in supply and strong demand amid China's renewed drive to support its slowing economy.
- The most-actively traded Dalian September iron ore contract jumped as much as 4% to 797.5 yuan/mt ($115.20), the highest since Dalian iron ore futures began trading in 2013, before ending +2.2% at 783.5 yuan, posting a weekly gain of 11.4%.
- BHP, Rio Tinto (NYSE:RIO) and Fortescue Metals (OTCQX:FSUMF) all hit mutli-year highsovernight on the Australian Stock Exchange, which itself hit another 11-and-a-half year peak.
- Some analysts see no end in sight to iron ore's rally that began shortly after Vale's (NYSE:VALE) tailings dam collapse in Brazil in late January.
- "Supply losses in Brazil look structural, leaving the market undersupplied until 2020," ANZ analysts write. "Attractive steel margins amid stronger infrastructure spending in China bode well for demand."
| Year End 31st Dec | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | TTM | 2019E | 2020E | CAGR / Avg | |
| $m | 3,891 | 3,373 | 2,013 | 1,555 | 1,866 | 2,332 | 2,309 | 2,322 | 2,326 | -9.7% | |
| $m | 1,380 | 146.3 | 544.2 | 297 | 224.8 | 666.4 | 635.3 | -13.6% | |||
| $m | 413.5 | -7,224 | -749.3 | 174.1 | 367 | 1,128 | 1,190 | 495.9 | 404.5 | +22.2% | |
| $ | 5.06 | 7.14 | 0.68 | 0.49 | 1.24 | 3.42 | 3.37 | -7.5% | |||
| $ | 5.12 | 9.77 | -0.97 | -0.038 | 1.61 | 3.44 | 3.39 | 1.81 | 1.40 | -7.7% | |
| % | +90.6 | +113.3 | +108.3 | -47.4 | -22.5 | ||||||
| x | 2.86 | 2.90 | 5.44 | 7.03 | |||||||
| x | n/a | n/a | n/a | n/a | |||||||
| Profitability | |||||||||||
CLF is probably going to make at LEAST $1.50 per $9.71 share this year and the higher ore prices as well as being local to North America I think gives them a big advantage this Q so I think it's time to jump back into CLF:
For the OOP:
- Sell 10 CLF 2021 $10 puts for $2.60 ($2,600)
- Buy 20 CLF 2021 $8 calls for $3 ($6,000)
- Sell 20 CLF 2021 $12 calls for $1.50 ($3,000)
That's net $400 on the $8,000 spread so $7,600 (1,900%) of upside potential if CLF manages to get back over $12 in 18 months. Of course, we're likely to deconstruct it and take profits early but, for now, that's our goal – just the 1,900% gain (averaging 100% per month is not too shabby).
For the LTP:
- Sell 20 2021 $12 puts for $4 ($8,000)
- Buy 50 2021 $8 calls for $3 ($15,000)
- Sell 50 2021 $12 calls for $1.50 ($7,500)
Here we're taking a $5 credit and we have a pretty aggressive put sale as a trade-off but it's a nice, $20,000 spread so $20,500 (4,100%) upside potential and really we're only risking losing $2 more per share than the OOP and, since the LTP can shrug off a $10,000 loss easily – there's no reason not to be more aggressive.
