Cliffs Natural Resources: Market Too Bearish Despite Strong Outlook And Cheap Valuation

Trefis submits: Cliffs Natural Resources (CLF) is an international mining and natural resources company. It is the largest producer of iron ore pellets in North America and a major supplier of direct-shipping lump and fines iron ore out of Australia. It is also a significant producer of metallurgical coal.

Cliffs Natural Resources Inc., the biggest U.S. iron-ore producer, said it will take a US$1-billion writedown for the fourth quarter related to its 2011 acquisition of Consolidated Thompson Iron Mines Ltd. The writedown is primarily due to an anticipated decline in Consolidated Thompson’s long-term production volumes and an increase in its capital and operating costs, Cleveland-based Cliffs said Thursday in a statement.

LONDON – Following a half-decade-long boom in demand from China, the price of iron ore dropped sharply in 2012. While it bounced back a bit toward the end of the year, the price remains far below its February 2011 peak, and analysts say it is unlikely to return to those heights in the foreseeable future.   The price of iron ore, the raw material used to make steel, is a bellwether for manufacturing and construction and its price fluctuations, much like the price of crude, reflect the health of the global economy.  

By Caiman Valores:With the recent spike in iron ore prices, there is growing interest in iron ore mining companies, particularly as they were sold off when their prices plunged along with the spot price for iron ore in August 2012.

By Doolan Wesley:Cliffs Natural Resources Inc. (CLF) is an international mining and natural resources company. The company harvests metallurgical coal and iron ore and sells to steel producers. Currently the stock is trading around $52 a share, and has fallen $50 from the 52 week high of $102.

By Alex Shadunsky: Cisco (CSCO) was on its way to becoming a fairly valued stock before its weak guidance send the stock down. This opportunity is presenting another entry point into the stock for patient, long term investors.

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By Charlie Anderson:Cliffs Natural Resources is a largest iron ore producer in North America, but growth is still in the double digits. While Cliffs increased production by 50% last year, a major portion of Cliffs' fast growth is due to higher spot prices. These sustained high prices have helped Cliffs make numerous acquisitions in the past few years, thus further expanding production. Given the decreasing quality of iron ore mined and the increasing demand from the emerging markets, higher prices may be the new normal.