| Cliffs Natural Resources: Outlook on the Seaborne Iron Ore Market | |
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Cliffs Natural Resources' 3Q15 Earnings: Key Takeaways and Outlook (Continued from Prior Part) Seaborne iron ore situation
According to Cliffs Natural Resources’ (CLF) chief executive officer, Lourenco Goncalves, the current situation in the seaborne iron ore market is the making of big Australian iron ore miners. He said their misguided focus on market share instead of price is giving a cheap avenue to Chinese (FXI) (MCHI) mills to overproduce steel. This is leading China to ship more steel into the world (ACWI) markets as its domestic economy slows. This is resulting in lower steel prices and reduced earnings for global steelmakers.
Rationality on supply side
Expanding on the mismatch between supply and demand in the seaborne market, Cliffs’ management said that Vale (VALE) is already depicting rationality in terms of cutting high-cost production. This may be because is has a clear disadvantage in terms of freight costs compared with its Australian peers, BHP Billiton (BHP) (BBL) and Rio Tinto Group (RIO). Cliffs’ management also thinks that BHP Billiton is slowly backing off from its previous bullish numbers regarding Chinese steel demand estimates. Though the estimate cut is very small, it’s still in the right direction. They think that Rio Tinto is most “stubborn” of the lot.
Demand side
On the demand side, Goncalves commented that CISA (China Iron and Steel Association) is itself saying that consumption is going down and they need to reduce production. Baosteel’s chairman has also commented that steel production should go down by 20%.
Concluding on the current situation, Goncalves said that they’ve decided to stay within US boundaries, the best market to be in. They’re preparing themselves for the electric arc furnace markets. The management is also hopeful regarding the domestic US steel market as antidumping suits and countervailing suits arise.
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CLIFFS Natural Resources
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PRODUCER |
CODE : CLF |
ISIN : US18683K1016 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
CLIFFS Natural Res is a iron producing company based in United states of america. CLIFFS Natural Res produces iron, coal in Australia, in Brazil and in Canada, and holds various exploration projects in Canada. Its main assets in production are WABUSH MINE, EMPIRE AND TILDEN MINES, HIBBING TACONITE, NORTHSHORE MINE, UNITED TACONITE, OAK GROVE MINE, GREEN RIDGE MINE and PINNACLE MINE in Canada, AUSTRALIAN IRON ORE and SONOMA in Australia and AMAPA in Brazil and its main exploration properties are MT JACKSON J1 in Australia and DIAGNOS, WAWA, FREEWEST, MC FAULD'S LAKE, MACFADYEN, WAWA CLAIMS and BIG DADDY in Canada. CLIFFS Natural Res is listed in France, in Germany and in United States of America. Its market capitalisation is US$ 5.4 billions as of today (€ 5.1 billions). Its stock quote reached its highest recent level on May 16, 2008 at US$ 99.17, and its lowest recent point on January 15, 2016 at US$ 1.20. CLIFFS Natural Res has 297 400 968 shares outstanding. |