Out Fox The $treet

Incredible news from Vale (VALE) the leading iron ore producer in the world located in Brazil. VALE plans to double capital  spending int 2011 to $24B in order to diversify away from iron ore and into pricier metals and fertilizers. This is nearly a doubling from the $12.9B planned for 2010. Who will benefit from the increased spending? Naturally companies like Joy Global (JOYG), Bucyrus (BUCY), and Caterpillar (CAT) could see improved orders. Terex (TEX) could see some orders for its new port crane business as well. What's interesting is that a large portion of the increase will go towards logistics building of expanding rail capacity and ports. Maybe that explains why CAT recently expanded its rail engine exposure. One of the major focuses of the spending will be on fertilizers. Goals include doubling phosphate rock output and quadrupling potash production by 2015. Coal production will also nearly quadruple with just about every area nearly doubling. As far as VALE, its n...

Joy Global (JOYG) is a leading builder of mining equipment especially needed for the mining of coal. Unfortunately its not owned by the Stone Fox Capital portfolios, but they do provide a great insight into the world commodity markets. JOYG reported a strong quarter and more importantly talked about 'some slowing' in global commodity demand, but reiterated that demand remains at historical highs. The key take away is that prices for met coal, iron ore, and copper remain at elevated levels and mining capacity is above 90%. Therefore, the active prospect list is growing very fast. In essence, JOYG speaks of a marker that has taken a pause before it journeys higher. Little did they know that the ISM Manufacturing report released a couple of hours later would unleash a big rally in the markets. New orders were up 51% over last year. Backlog increased to $1.8B from $1.5B on October 30, 2009. More importantly guidance was raised to between $4.1 and $4.15 up from an analyst estim...

Joy Global (JOYG) has one of the more detailed earnings reports especially regarding end user demand for commodities like copper and coal that we favor as being in short supply because of the booming demand in China and now apparently India. The coal import demand from these 2 countries could be just staggering in the next few years. While copper could be in short supply in 2011 has industrialized countries return to stronger demand at the same time that China uses more and more. Everything points to higher commodity prices then the peak prices in 2008. See below for the outlook from JOYG. Market Outlook Demand for mined commodities continues to be dominated by strong imports from the emerging markets, and from China and India in particular, with improving but still weak fundamentals from the industrialized countries. For the past year, China has been the major source of increased demand for commodities as it deployed a more effective stimulus program and ...