X vs. PKX... and the winnah is...

Here's the ADR of POSCO (ticker PKX in yellow, formerly Pohang Iron & Steel, or something like that) vs US Steel (ticker X in white, formerly known as USX, and before that, Federal Steel + National Tube + American Steel Hoop Co etc and, before that, US Steel.)

The market cap of PKX at USD45bn is (at the moment) almost exactly double that of X - a massive change from the ratio as recently as a year ago:


Both trade in USD, but obviously facing very different operating environments... From an article yesterday in Bloomberg entitled: "Bernanke's Inflation Cure Wanes as Import Costs Rise"

• The surging oil prices that are raising exporters' costs to ship everything from steel to sofas to America are encouragingc ustomers to buy more domestically made goods -- and giving the producers of those goods more room to raise their prices.
• ``Higher freight rates were the final straw in tipping the balance to domestic producers,'' coming, as they did, on top of a weaker dollar
• `` A weak dollar means that domestic producers are better sheltered from competition by foreign suppliers,'' Edmund Phelps, winner of the 2006 Nobel Prize for economics ... ``So the domestic producers here in the United States will have every incentive, therefore, to take advantage of that greater protection from competition by raising their markups.''
• Chinese steelmakers are doubly disadvantaged by higher oil prices. Not only do they face the added cost of shipping products to the U.S., they also must pay more to transport iron ore to their mills from Brazil and Australia.
• Pittsburgh-based U.S. Steel Corp. in contrast, is able to meet the majority of its iron-ore needs in North America from its two mines in Minnesota.

(I've mentioned shipping costs and Asian exports here before - but that didn't address the double-whammy mentioned above!)

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Sure enough, being stuck between a rapidly shrinking lump of iron ore and a hard place, the Chinese steel producers today agreed to cough up to RIO and BHP for basically the same c.i.f. price that they're paying for iron ore from Vale (formerly known as CVRD, which stood for... oh, never mind), ie up to double what they'd previously been paying, and higher than expectations. (So did Nippon Steel & others, I believe.)

Less popular than Bush after 100 days - Myung-bak "W" Lee

From a great salestrader at CLSA in Seoul this morning:

Today marks the 100th day since president MB Lee was inaugurated. He holds the unfortunate claim to fame as the most unpopular president in history with an approval rating of only 19.7%.

Obviously at risk are MB LEE's hard nosed stance against unions (AUTOMAKERS meeting labour unions soon), along with the start of the Grand Canal project (CONSTRUCTION names may come under pressure). BANK privatization may also be at risk, especially after the financial labour yday said they would strike beginning June 11 to protest the govt's fund-raising plan.

We'll see more protests today, with over 100,000 people expected to gather in Seoul to demonstrate against US beef imports. Expect another day of mayhem downtown - but hopefully more peaceful than what was seen over the weekend:

Neither Dave Thomas nor Clara Peller were seen there:

(Not too surprisingly, if you think about it.)

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From the Economist: KAL's take on Bush... and Brown... and Sarkozy...

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On the other hand, I am working on the idea that perhaps MB Lee will look to juice up his non-existent popularity by some wild fiscal spending and boost domestic feel-good (and consumption) that way... and perhaps end up further weakenening the Won, to the benefit of some tech exporters?? Just a thought.