If things go well for U.S. Steel, the long equity position likely offsets whatever loss you would take on the CDS. U.S. Steel is far from immune to the price impact of Chinese demand, he says, and as a vertically integrated steelmaker it has exposure all along the process from iron ore to finished products.
Preventing this process using an iron-free, corrosion-resistant alloy barrier is particularly important in a city like Boston, where the air is damp and laden with salt water.
With iron this then falls off allowing the layer of iron underneath to undergo the same process, fall off and before you know it your Alfa Romeo sports car is in little pieces on the driveway.