Thread by @BULLReturns

Thought of the day: Fighting #commodity price tops will just result in 75% plus stockprice retracements, #cyclicality music always stops, grab a chair early to avoid serious regrets and portfolio destruction. Easy clue to follow, is 65-80% margins above cost curves are peakish.

Those #commodities that are currently near bottoming (0-20%) for the next up cycle 2H2023-2025....

#tin -65%
#ironore -66%
#nickel -60% (moving up)
#Lumber -72%
#zinc -40%
#HRCSteel -67%

Know where you are in the cycle....

1st Quartile candidates for the next cycle...

A deep recession would see industrial metals decline to costs curves or into negativity for high cost producers, this is often around 75% down from 2021 peak levels.

Note we need to take into account those with historic low inventory levels currently.
#Commodities
#cyclicality

Generally zero or negative margins (supply shut down incoming) with low global inventories (lack of dumping overhang) offset with immediate recession demand destruction = #commodity bottoming 1st Quartile entry points

Demand destruction can offset low global inventories in S/T.

#ironore cycle 2H2023-2025

1st quartile $40-90/t = high probability of 4-8x gains in pre-production plays

2nd quartile $90-$140 = 2-4x returns

3rd quartile $140-$190 = 1-2x returns

4th quartile >$190 = high probability of 0-75% loss

#tin cycle 2H2023-2025

1st quartile $12k-18k = high probability of 4-8x gains

2nd quartile 18-28k = 2-4x returns

3rd quartile 28-38k = 1-2x returns

4th quartile >38k = 0-75% loss

Newcastle #thermalcoal cycle 2023

1st quartile $40-90/t = high probability of 5-10x returns from pre-production plays

2nd quartile $90-$130 = 3-6x returns

3rd quartile $130-$170 = 2-4x returns

4th quartile >$170 = high probability of 0-75% declines

#coal