SPDR® S&P Metals and Mining ETF

U.S Steel has embarked on an ambitious transformation plan, which it named “Carnegie Way.”

Demand for OCTG products is expected to be subdued in the coming months. This would continue to put pressure on U.S. Steel’s Tubular segment.

Vale’s (VALE) average CFR (cost and freight) realized price for iron ore fines increased by $3.30 per ton, from $58.20 per metric ton in 1Q15 to $61.50 in 2Q15.

U.S. Steel’s Flat-Rolled segment posted negative EBIT of $24 per ton in 2Q15. This represents a slight improvement over 1Q15 results.

Vale’s (VALE) iron ore production for 1H15 was a record 159.8 million tons, 9.3 million tons higher than 1H14. For 2Q15, production was the second highest on record at 85.3 million tons.

Gold touched its lowest level on July 24. Its price fell to $1,073.70. Miner ETFs have suffered more than gold prices themselves.

In this article, we’ll look at Vale’s (VALE) 2Q15 results and why they’re a beat on market expectations. Vale reported adjusted EPS of $0.19, which was 55% above consensus.

Vale S.A. (VALE) reported its 2Q15 results on July 30, 2015. Overall results were a beat on market expectations. However, Vale’s stock price fell 6.5% after Vale announced its results.

U.S. Steel has bounced back from its 52-week low. In fact, most steel company earnings have been better than analyst expectations.

Cliffs’ results were a miss primarily on lower-than-expected realized revenues for its USIO segment. US iron ore’s realized revenues were $78.30 per ton in 2Q15, compared with $106.80 per ton in 2Q14.

Cliffs Natural Resources reported revenues of $498 million for 2Q15, a decline of 33% year-over-year.

Cliffs Natural Resources announced its 2Q15 earnings on July 29, and its results missed market expectations this time. Cliffs offered positive results six out of the last eight times.

Alcoa was trading at its 52-week low on July 23 and closed at $9.96—breaching the psychologically crucial level of $10 per share for two consecutive days.

Freeport-McMoRan (FCX) released its 2Q15 earnings on July 23. It reported a net loss of $1.85 billion, which was largely attributable to the $2 billion write-down of its oil and gas assets.

Freeport’s average realized copper prices fell 14% in 2Q15 on a year-over-year basis. Lower commodity prices took a toll on Freeport’s 2Q15 profits.

In this series, we’ll discuss some of the important metrics that drive the dry bulk shipping industry. Investors can gain exposure to commodities through the SPDR S&P Metals and Mining ETF (XME).

According to data released on June 22 by the WSA, world crude steel production totaled 139 million tons in May. This is a 2.1% decline year-over-year.

China’s industrial production grew by 6.1% year-over-year in May. Economists were expecting an increase of 6.0%. May’s growth is higher than the 5.9% year-over-year growth in April.

According to Nucor “Empowerment isn’t a corporate buzzword—it’s a way of life.”

Secondhand vessels are delivered faster than newbuilds. As a result, secondhand vessels represent more of the short to medium-term outlook.

Vale S.A. (VALE) reported revenues of $6.4 billion in 1Q15, a decline of $2.9 billion compared to 4Q14. Most of the decline is due to seasonally lower sales volumes and lower commodity prices.

On April 23, Freeport said it might look at selling a minority stake in its energy business and come out with an IPO of its oil and gas subsidiary later in the year.

Alcoa (AA) reported its 1Q 2015 earnings on April 8. It reported net income of $195 million on revenues of $5.8 billion.

In 2014, its zinc operations contributed 31% to revenues and made up 27% of gross profit before depreciation and amortization.

The iron ore price slide has been particularly pronounced in the last few weeks, as Chinese demand didn’t pick up as expected after the New Year holiday.

As for market sentiment, Cliffs (CLF) seems to be on the receiving end. Most of it is due to the worsening current and future outlook for iron ore prices.

Cliffs Natural Resources’ (CLF) key driver is global demand for the raw materials used to make steel.

China is the world’s biggest automotive market, where close to 22 million vehicles are sold each year. A mid-sized vehicle has ~50 pounds of copper content.

Copper is also known as “Dr. Copper,” as analysts see the metal’s prices as a reflection of the global economy’s health.

Freeport has lost almost 20% of its market capitalization so far this year, making 2015 a turbulent period for the company.

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.

BHP Billiton (BHP) is a leading global diversified resources company and is one of the world’s largest major commodity producers.

Steel prices crashed by almost two-thirds at the peak of the global financial crisis in 2009. Last year, they dropped by 10%.

Vale’s results were a miss on expectations with a reported adjusted EPS loss of $0.05 per share. This is below the consensus of $0.19 per share.

Vale is the world’s largest producer of iron ore and iron ore pellets. It’s the second largest nickel producer.

Key earnings takeaways from Vale’s results show cost of goods sold amounted to $25.1 billion in 2014, an increase of $819 million from 2013.

China’s manufacturing PMI has been below 50 for two consecutive months. This reflects a slowdown in the Chinese economy and impacts industrial commodities.

It’s important to look at iron ore indicators collectively because they give clues about the direction of iron ore prices.

Freeport-McMoRan (FCX) is a leading natural resources company. It’s among the top copper producers and holds the position of largest molybdenum producer.

Steel scrap prices fell by ~20% in 2014. Lower steel scrap prices should bring down unit production costs for steel plays.

Cathodes are not used directly by copper consumers. Cathodes are melted and cast into shapes based on end usage, such as cakes, ingots, rods, and billets.

Copper mining is concentrated in Latin America, while the major copper consumers are in Asia. More than 60% of global copper consumption comes from Asia.

Mining giants Rio Tinto and BHP Billiton have diversified portfolios of iron ore, aluminum, and copper assets, with most revenues coming from iron ore.

While iron ore prices crashed, production costs for iron ore haven’t come down. Steel plays’ mining operations have been hit by the fall in iron ore prices.

Headquartered in Melbourne, Australia, BHP Billiton operates 100 locations in 25 countries. A merger between BHP and Billiton created the company in June 2001.

The difference between Chinese and US steel prices is still quite high to encourage imports. Marginal narrowing of the price difference won’t deter imports.

China’s shadow banking includes the trust sector, the off balance sheet lending by commercial banks, and financing vehicles of commercial banks.

With over 65% exports going to China, China is the real swinger in global iron ore prices. A slowdown in China caused panic among all major commodity exporters.

Steel prices tend to move in tandem with capacity utilization rates. Steel prices are a key factor affecting performance, directly impacting the revenues of companies.

U.S. Steel Corporation’s stock has surged in the past few months, delivering more than 150% growth in the last year.