Leveraging
the expertise and logistics of five strategic subsidiaries, China-based Armco
Metals Holdings (NYSE MKT: AMCO) is aligned with the Chinese government’s push
toward an environmentally friendly economy, achieved in part by an increase in
scrap metal consumption.
Armco’s
strategy to be a part of this initiative is to create low-cost, high-quality
solutions to meet the demands of the steel industry and subsequently achieve
its goal to become the largest scrap steel recycler in China.
In its
more than 10 years of operation, Armco has established long-standing
relationships with nearly a dozen international metal suppliers, more than 100
small-sized and medium-sized Chinese steel production companies, and some of
the country’s large state-run foundries.
The
company’s subsidiaries are located in key regions throughout the country to
enable streamlined and efficient sourcing, importing, processing and
distribution of quality, environmentally friendly recycled scrap steel, in
addition to metal and non-ferrous metal ore.
The Armco
(Lianyungang) Renewable Metals, Inc. subsidiary is located on 32 acres in the
Jiangsu province and is home to the Texas Shredder Lindeman System, one of the
most advanced recycling systems in the world. The Texas Shredder automatically
shreds, sorts and separates recycled scrap steel to process highest-quality
material and is capable of processing 1 million metric tons of scrap metal each
year.
Armco is
also seeking out diversification of its business model to capitalize on
low-risk, high-return opportunities and has been taking steps to diversify its
product line and develop new products into its existing business line.
In this
regard, the company’s Armco Metals International subsidiary has entered into an
agreement to purchase a trial shipment of Eucalyptus Nitens wood chips from a
Chile supplier. The agreement calls for the purchase of roughly 50,000 green
metric tons (GMT) in October 2014 and a one-year total importation of
550,000-600,000 (GMT) if the trial shipment is a success.
The market
for these woodchips is new pulp mills in China that want to expand importation
of woodchips to meet their growing needs. While China’s area of eucalyptus
plantations doubled between 2006 and 2012, this expansion is not enough to meet
market demands. Based on current market prices, Armco estimates the market
value of 600,000 GMT woodchips at approximately $63 million and expects to
realize 10% gross margin on potential sales of the product.
For more
information, visit www.ArmcoMetals.com
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