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China’s automotive industry is the second-largest steel consumer after the real estate sector.
China’s aggregate financing stood at ~3.7 trillion Chinese yuan in January 2017, as compared to 1.6 trillion yuan in December 2016.
According to its National Bureau of Statistics, China’s real estate sector grew 7.7% in 4Q16, as compared to 8.8% in 3Q16.
China produced 808.4 million tons of steel in 2016 and 68.9 million tons of steel products in December 2016—a YoY 7.1% rise.
In December 2016, steel prices in China hit 3,557 Chinese yuan per ton—the highest level in two and a half years.
China imported 92 million tons of iron ore in January 2017—a growth of 12.0% YoY and 3.4% month-over-month.
In January 2017, 40.3 million tons of iron ore were exported from Port Hedland—an impressive rise of 19.0% YoY.
Iron ore inventories at Chinese ports have risen 11% YTD in 2017. Port inventories stood at 127 million tons on February 10.
Cliffs Natural Resources management is quite upbeat on the prospects of seaborne iron ore prices in 2017.
According to Bloomberg’s median, iron ore prices will drop every quarter in 2017 to an average of $55 per ton in 4Q17.
According to Bloomberg, Rio Tinto CFO Chris Lynch has suggested that iron ore prices will not collapse, as many expect.
Second-tier iron ore miners like BC Iron, Atlas Iron, and Mount Gibson have been trying very hard to stay afloat for years.
Chinese iron ore futures had been on a roll for six days in a row until February 14, 2017.
Iron ore began 2017 on a positive note. Benchmark prices reached $92.23 per ton on February 13—its highest since August 2014.
Cliffs has “buy” and “sell” recommendations from 22% of analysts each, while 56% of the analysts are recommending a “hold.”
In 4Q16, Cliffs’ cash costs of goods sold for APIO was $36.4 per ton, or 8% higher YoY.
Seaborne iron ore prices have held firm in 2016 and 2017 YTD, despite market participants calling for a downturn.
Cliffs’ US volumes totaled 6.9 million long tons in 4Q16, which represents an impressive growth of 53% YoY.
Cliffs Natural Resources’ average realized prices were 0.5% lower YoY in 4Q16 at $73.8 per ton.
Cliffs’ (CLF) debt escalated due to acquisitions at the peak of the cycle and subsequent write-downs.