Cliffs Natural Resources stock prices in a changing environment
Cliffs’ (CLF) stock prices fell to a fresh 52-week low of $4.24 on March 19, mostly due to an iron ore supply glut coupled with slowing Chinese demand.
March 26 2015, Published 10:49 a.m. ET
Iron ore price performance
Benchmark iron ore prices have fallen ~13.0% year-to-date. Iron ore prices have hit a six-year low of $57 per ton. The prices of iron ore miners have not fallen uniformly, however, as we’ll see in this article.
How are iron ore companies doing?
BHP Billiton (BHP) and Rio Tinto (RIO) have been the best performers among all the iron ore miners since January 2015. They’re up 0.8% and down 0.8%, respectively. Vale S.A. (VALE) was down 22.9%. Pure play Fortescue Metals Group (FSUGY) is down 30.4%.
Cliffs Natural Resources (CLF) had the worst fall of all the above companies. It fell 34.9% year-to-date. CLF forms 2.9% of the SPDR S&P Metals and Mining ETF (XME).
BHP and RIO are best performers
BHP and RIO are doing better in terms of stock price performance in the iron ore sector since their results were a beat on market expectations. The cost-out programs and productivity gains are a major reason for the beat.
Cliffs continues to fall
Cliffs Natural Resources’ (CLF) stock prices fell to a fresh 52-week low of $4.24 on March 19. There are many reasons for this. Most of them relate to the iron ore supply glut coupled with slowing Chinese demand.
Cliffs is more sensitive to these than more diversified and bigger players such as BHP and RIO. Its main earning asset, the US iron ore division, is not involved in the seaborne market and is protected by legacy contracts with North American steelmakers. Its other divisions, particularly Bloom Lake, have been a drag, and high debt isn’t helping.
Before we look in detail at Cliffs Natural Resources’ (CLF) current situation, let’s get a quick overview of its business.
