Iron ore price performance
Benchmark iron ore prices have fallen ~17.0% year-to-date. Iron ore prices had hit a decade-low of $47.08 in early April, but they recovered to trade at the current price of $56 per ton. The prices of iron ore mining companies 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, and are down 2.2% and 9.1%, respectively. Vale S.A. (VALE) was down 26.3%. Pure play Fortescue Metals Group (FSUGY) is down 32.5%.
Cliffs underperforms its iron ore peers
Cliffs Natural Resources’ (CLF) stock price fell to a fresh 52-week low of $3.86 on July 2. It fell 8.3% in a single day on July 2, mainly triggered by a target price cut by Deutsche Bank from $5.50 to $5.00.
Cliffs is more sensitive to these than larger, more diversified 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.
In the rest of this series, we’ll talk about the current market sentiment for Cliffs Natural Resources stock, as well as the other major factors that investors should look for to get a direction on Cliffs’ share price.