| Steady Rise in US Steel Prices Could Be Positive for Cliffs | |
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Cliffs Natural Resources: Weak Outlook in a Challenging Market (Continued from Prior Part) Steel prices
Most of Cliffs Natural Resources’ (CLF) revenues and earnings are tied to the US steel industry. Steel prices are also a component of Cliffs’ pricing formula. Let’s take a closer look at this and the implications for Cliffs going forward.
Steel prices have fallen YTD
The above chart shows the prices of hot rolled coil (or HRC) in the United States. While steel prices have risen from the lows reached in May this year, they are still down 19.8% year-to-date and 30% year-over-year. The prevailing prices for HRC are at almost the lowest levels since mid-2009.
On one hand, the China-led steel glut is negatively impacting steel prices. On the other hand, the oil price collapse led energy companies to pull back on their steel needs.
Lower steel prices negatively impacted the first quarter earnings of steel companies like US Steel (X), Nucor (NUE), and Steel Dynamics (STLD). Currently, Steel Dynamics forms 4.2% of the SPDR S&P Metals and Mining ETF (XME).
Although still low, steel prices started picking up in May and June. A continuation of this trend and declining imports due to trade cases and anti-dumping litigation could bode well for Cliffs going forward.
Although lower steel prices and declining steel production could be negative for US steelmakers, there could be a slight silver lining in the process. We’ll explore this issue next.
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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$ 6.2 billions as of today (€ 5.8 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. |