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Cliffs’ Stock Rose over 400% in 2016: What’s to Come in 2017?

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Cliffs Natural Resources reaches highs

Cliffs Natural Resources’ (CLF) stock price ended 2016 with a rise of 404%, trading at $8.4 per share. The stock hit a high of $10.48 on December 5, 2016. Its lowest point came on January 12, 2016, when it closed at just $1.26 per share. In the initial months of the year, trade rulings on imported steel helped Cliffs’ stock.

Cliffs then renegotiated a long-term contract with ArcelorMittal (MT), which boosted its stock further. The final big push came in the form of Donald Trump’s win as the US president. His stance on protectionism and infrastructure led US steel stocks (SLX) such as U.S. Steel (X), Nucor (NUE), ArcelorMittal, and AK Steel (AKS) to rally. Cliffs, the only iron ore pellet supplier to the US steel sector, also joined the party.

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Trump’s impact

Prior to the 2016 election, Trump campaigned heavily in steelmaking states, vowing to protect the sector from illegal and subsidized imports. The US steel industry is the obvious winner after Trump’s win, given Trump’s well-known stance on protectionism. Seaborne iron ore prices also soared after Trump’s win. This rise, in turn, supported Cliffs’ share price.

In this series

In this series, we’ll discuss indicators related to the domestic US steel market as well as the seaborne iron ore market, which investors can track to get a sense of what will likely drive steel prices and steelmakers in the coming months.

The indicators we’ll discuss are mainly related to US steel demand, domestic steel prices, US iron ore imports, Chinese steel demand, and seaborne iron ore demand.

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