The Weather Forecast for the Steel Industry Has Turned to Blue Skies
Dear fellow investor,
Resource Exchange of America Corporation (OTCBB: RXAC), a Florida-based recycling powerhouse, has received quite some tailwind from news this week:
According to the Wall Street Journal, the price for scrap metal is up 4% from September to October, while other kinds of metals see increases as high as 12%. The upward pressure on the scrap metal prices is primarily due to cutbacks in China as producers attempt to meet year-end energy targets. As Chinese mills currently account for around half of the world's steel output, any changes in that market is sure to have a major impact on the scrap metal industry. RXAC should therefore be able to sell their scrap metal at higher prices.
Also, the GMS Weekly Report for October told about above-normal prices for asset recovery of decommissioned ships: one notably high profile purchase was tanker Swift Resolute that found a cash buyer willing to pay $460/LT LDT, far above the current scrap market value of $394/LT LDT. The GMS Weekly Report anticipates further deals of this kind. This could be seen as an expectation of higher scrap metal prices in the long run as well.
Combined with RXAC's announcement earlier this week that they had signed a Letter of Intent with the National Energy & Waste Commission LLC for delivery of a minimum of 100 tons of pre-sorted metals per day from a new power plant that they are going to build, this is extraordinarily good news.
Not only is RXAC going to be able to purchase a steady stream of pre-sorted metal from National Energy & Waste Commission LLC at sensible prices, but now RXAC can expect to add 4% to their bottom line due to higher prices worldwide.
And finally, last month's highly anticipated report from California-based Global Industry Analysts (GIA) showed that while the scrap steel industry was hammered by the global economic meltdown in 2008 and 2009, scrap steel consumption is forecasted to bounce back to 631.5 million metric tons by 2015. This is partly due to improving automobile sales and a recovery of the building industry, but also to continued demand from Brazil, India and China.
So RXAC could actually expect even higher prices in the next 4-5 years, which will make their agreement with the National Energy & Waste Commission LLC even more profitable.
Overall, to Resource Exchange of America Corporation (OTCBB: RXAC), rising steel prices and their ability to secure a long-term flow of pre-sorted scrap metal is extremely positive news!
News that is going to support their business plan of increasing revenues 1,200% and profits 950%. Increases that should be equally reflected in their share price as well.
Do your due diligence, and follow this company closely – and add a nice chunk of shares to your portfolio while you're at it, if you want to be in on this steamroller of gold!
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