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Print[Ferro-alloys.com] Cliffs Natural Resources (CLF) will announce its first quarter results soon. Given the lower iron ore prices this year, we expect the company to post lower year-over-year revenues and profits.
The company is facing challenging times right now in both its business segments: iron ore and coal. Commodity prices have been tumbling, especially for copper, iron ore and aluminum. A lot of the blame could be ascribed to slowing Chinese growth, but there are other issues such as surplus capacity, which are accentuating the negative trend. (LME Copper Prices)
In March, Cliffs announced the idling of its Wabush Pointe Noire iron ore pellet plant in Canada due to high production costs and lower pellet premium pricing. The idling will take place by the end of the second quarter this year.
Last heard, the company has still not been able to reach a final agreement with the First Nations communities. First Nations are autonomous aboriginal communities who live in close proximity to Cliffs’ chromite properties, and are concerned about jobs, business opportunities and improved infrastructure. Due to the diverse nature of these communities and wide-ranging concerns, progress has been slow and negotiations complicated. Failure to reach an understanding on time may delay its chromite projects further.
As expected, this year began on a positive note for iron ore miners. The price of iron ore continued to rise in January and February from the previous quarter due to restocking by Chinese steel mills. However, once the restocking was done by the end of February, prices started falling. The Chinese government then came out with stringent rules to curb the housing market, which appeared to be in a bubble. This reduced the demand for steel, in turn impacting the demand for iron ore.
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