As goes stainless steel demand, so goes nickel demand. I’ve been looking for a dip to buy back my longtime hold CVRD (RIO) - the massive nickel mining giant from Brazil. After nickel bounced off its lows a couple of months ago, analysts and purchasing managers were looking for a rebound in demand in the 1st quarter of 2008 going into construction season. However, stainless steel demand is still much lower than where analysts had expected it…about a month or more behind schedule. As such, I’m weary to rebuild my position in CVRD. These mining stocks have had a massive run, and lately it’s been only on the dollar’s weakness (because as I’ve said, metal prices have stabilized). So if the dollar somehow stops dropping or even rebounds, this doesn’t look good. I’ll keep monitoring CVRD for a better entry point. Here’s the excerpt of the stainless steel article from Purchasing.com:

“Stainless demand has not yet returned, according to market reviews by several analysts who had expected purchasing and pricing to rebound this month or next. Lower nickel prices since the peak in May “haven’t yet enticed stainless steel buyers back into the market as quickly as had been anticipated,” admits analyst Mike Gambardella at J.P. Morgan Securities in New York.”

full article here: Stainless buyers’ strike is longer than expected

**Disclosure: author has no positions in the stocks mentioned**

Moving on in Honeywell’s call, management was also excited about the Specialty Materials business:

“Let’s go now to slide number 8, Specialty Materials. Sales are up 6% for SM; segment profit increased 43% driving 340 basis point improvement segment margins to 13%. UOP had a great quarter; sales grew 28% compared to last year and UOP continues to experience strong demand for its proprietary technologies refining and petrochemical market conditions remain favorable, and we continue to leverage a strong market positions and global presence in UOP. Chlorine [ph] products were down 15% in revenues in the quarter due to softness in refrigerants, which is impart of course due to continued weak demands in the U.S. housing market, strong advanced fiber sales within specialty products were offset by declines at resins and chemicals due to a plant maintenance outage, so those two are essentially offset; specialty products and resins and chemicals.”

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Honeywell Confirms Strength in Energy, Construction, and Infrastructure

Since they reported on Friday morning, all I’ve been hearing is “Caterpillar reported terrible numbers and so did Honeywell, undermining the global growth thesis, causing the massive 300+ selloff in the Dow.” Ok, I own CAT, which wasn’t pretty. I guess I’m just glad it didn’t take a 16% shallacking like it did same quarter last year (on my birthday no less!). Honeywell however, I thought was pretty darn good given headwinds such as the massive Dreamliner 787 delay and the housing recession. The headlines on Reuters reads: Honeywell sees subprime hitting industry-paper. Just had to tag on the word “subprime” to scare the bejesus out of investors. Interesting choice of highlighting this tiny tiny part of the whole conference call. Well, why don’t we focus on all the great things Honeywell did in this quarter and where we can look for opportunities? (I’ve already talked up Honeywell enough in my past posts and I continue to put my money where my mouth is, but we lets look at other related industries shall we?) Read the rest of this entry »

Baosteel Says Iron Miners Can’t Keep Pace With Demand as Steel Output Rose Baosteel Group Corp., China’s biggest steelmaker, said iron ore supplies are lagging behind demand from the country’s mills, indicating it may struggle to hold down prices in talks with mining companies led by BHP Billiton Ltd.

Chinalco Buys More Overseas Copper Producers to Meet Nation’s Metal Demand Aluminum Corp. of China, parent of the nation’s biggest producer of the metal, plans to buy more overseas copper mining companies to meet rising domestic demand and help diversify earnings.