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Why the Long-Term Outlook on Iron Ore Prices Is Still Negative (Continued from Prior Part) China crude steel
China accounts for about half of global steel production and is the world’s biggest buyer of seaborne iron ore. Iron ore is the main ingredient in steel manufacturing, and China is the largest producer and consumer of the two commodities.
China’s steel output increased month-over-month by 1.7% to 66.9 million tons. However, the production declined by 3.5% on a year-over-year (or YoY) basis. For the first eight months of the year, the production dropped by 2% to 543 million tons over the same period last year.
Part of the YoY decline is due to the shutdown of some mills in and around the Hebei province to ensure quality air for the military parade to commemorate the World War II anniversary.
Outlook remains negative
According to the China Iron and Steel Association (or CISA), China’s crude steel output could decline by as much as 2% in 2015. This estimate is lower than CISA’s March estimate of a decline of 1.1%. Weaker construction and manufacturing demand are weighing on steel prices, which is leading to lower steel production.
A decrease in China’s crude steel production would impact the iron ore miners engaged in seaborne iron ore trade such as BHP Billiton (BHP) (BBL), Rio Tinto (RIO), Vale SA (VALE), Fortescue Metals Group (FSUGY), and Cliffs Natural Resources (CLF). A production decrease would also affect the iShares MSCI Global Metals & Mining Producers ETF (PICK). All listings of BHP, RIO, VALE, and FSUGY form 34.1% of PICK’s holdings.
To take a broader approach toward investing in the steel sector, consider the SPDR S&P Metals and Mining ETF (XME). Cliffs Natural Resources (CLF) makes up 3.8% of XME’s holdings.
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CLIFFS Natural Resources
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PRODUCTEUR |
CODE : CLF |
ISIN : US18683K1016 |
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ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
CLIFFS Natural Res est une société de production minière de fer basée aux Etats-Unis D'Amerique. CLIFFS Natural Res est productrice de fer, de charbon au Bresil, au Canada et en Australie, et détient divers projets d'exploration au Canada. Ses principaux projets en production sont WABUSH MINE, EMPIRE AND TILDEN MINES, HIBBING TACONITE, NORTHSHORE MINE, UNITED TACONITE, OAK GROVE MINE, GREEN RIDGE MINE et PINNACLE MINE au Canada, AUSTRALIAN IRON ORE et SONOMA en Australie et AMAPA au Bresil et ses principaux projets en exploration sont MT JACKSON J1 en Australie et DIAGNOS, WAWA, FREEWEST, MC FAULD'S LAKE, MACFADYEN, WAWA CLAIMS et BIG DADDY au Canada. CLIFFS Natural Res est cotée aux Etats-Unis D'Amerique, en Allemagne et en France. Sa capitalisation boursière aujourd'hui est 5,3 milliards US$ (5,0 milliards €). La valeur de son action a atteint son plus haut niveau récent le 16 mai 2008 à 99,17 US$, et son plus bas niveau récent le 15 janvier 2016 à 1,20 US$. CLIFFS Natural Res possède 297 400 968 actions en circulation. |