| Low Steel Prices May Hurt Cliffs Natural Resources’ USIO Division | |
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What to Expect from Cliffs Natural Resources’ 4Q15 Earnings (Continued from Prior Part) Realized revenues
In 3Q15, Cliffs Natural Resources’ (CLF) realized revenues from its USIO, or U.S. Iron Ore, division were lower than expected. The USIO division reported revenue realization of $76.50 per ton in 3Q15 compared to $100.70 per ton in 3Q14.
Average realized prices were negatively affected to an extent of $24.20 per ton on a year-to-date basis. This was mainly due to lower hot rolled steel prices in the United States (SPY) (IVV), which in turn affect US steelmakers, including Nucor Corporation (NUE), United States Steel Corporation (X), Steel Dynamics (STLD), and ArcelorMittal (MT). Currently, Nucor forms 2.8% of the Materials Select Sector SPDR Fund (XLB). Metal producers currently make up ~9% of XLB’s portfolio.
Increased realized revenue guidance
Cliffs Natural Resources had increased its USIO realized pricing guidance by $5 per ton for when seaborne iron ore prices are between $55–$60 per ton and $80–$85 per ton. This was mainly due to the improved customer mix, which generated a benefit of $4 per ton.
Downside to realized revenue?
However, since then, seaborne iron ore prices have fallen below $45 per ton. This should negatively impact the USIO division’s realized prices, as well. Cliffs Natural Resources’ (CLF) pellet supply agreements with steelmakers include the hot band steel price as one of the variables. Lately, hot rolled steel prices have been on a downward spiral. This has made spot sales unprofitable for several US steel companies. Steel companies have reduced their spot sales in response to depressed spot steel prices.
Despite lower volumes, CLF’s management maintained its guidance for the cost of goods sold at $60–$65 per ton. These costs include expected idle costs.
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CLIFFS Natural Resources
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PRODUCTEUR |
CODE : CLF |
ISIN : US18683K1016 |
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ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
CLIFFS Natural Res est une société de production minière de fer basée aux Etats-Unis D'Amerique. CLIFFS Natural Res est productrice de fer, de charbon au Bresil, au Canada et en Australie, et détient divers projets d'exploration au Canada. Ses principaux projets en production sont WABUSH MINE, EMPIRE AND TILDEN MINES, HIBBING TACONITE, NORTHSHORE MINE, UNITED TACONITE, OAK GROVE MINE, GREEN RIDGE MINE et PINNACLE MINE au Canada, AUSTRALIAN IRON ORE et SONOMA en Australie et AMAPA au Bresil et ses principaux projets en exploration sont MT JACKSON J1 en Australie et DIAGNOS, WAWA, FREEWEST, MC FAULD'S LAKE, MACFADYEN, WAWA CLAIMS et BIG DADDY au Canada. CLIFFS Natural Res est cotée aux Etats-Unis D'Amerique, en Allemagne et en France. Sa capitalisation boursière aujourd'hui est 3,3 milliards US$ (3,0 milliards €). La valeur de son action a atteint son plus haut niveau récent le 16 mai 2008 à 99,17 US$, et son plus bas niveau récent le 15 janvier 2016 à 1,20 US$. CLIFFS Natural Res possède 297 400 968 actions en circulation. |