The price of iron ore is predicted to go below $100 as it did in 2012, but with the cold weather, construction slowed significantly. When the temperatures warm, activity will be much greater than normal as indicated by the most recent jobs report. Construction hiring was up. There is pinned up demand that has the potential to increase construction quickly. Rebar inventory will began to go down. Just look at the Nat Gas story. A few months ago, we were greatly oversupplied, but now, because of the winter weather, we are actually low on supply. The same may play out for rebar and other steel products such as beams, etc. This would be beneficial to CLF.
That was too high, but, today's price is way too low. All the iron ore and coal companies are being trashed right now. With the delay in the record date, something positive should materialize.
Deutsche Bank upgrades to a buy on Jan 14 and Wells Fargo downgrades to Underperform today. The March 31 results will give some insight as to which analyst is right.
Sentiment: Strong Buy
Hardly a day goes by and some analyst bashes CLF for spot prices, mine troubles, or China slowing down. Nevertheless, CLF continues to beat analysts expectations in spite of a challenging environment. But, the company is not sitting around waiting for their company to dissolve. On the contrary, CLF hired a new CEO, Gary Halverson, a person with a solid track record in the mining industry. They cut back on their Cap Ex to continue to built cash flow. A couple of days ago, CLF reached a new supply deal with ArcelorMittal that will allow it to keep the Empire mine producing. But, in spite of all the good, analysts only focus on the bad. Well, when I read CLF's quarterly filings, I see a lot of positives. Debt continues to be paid down, cash flow is increasing, and earnings aren't are reasonable given the environment. Well, I still have a position and plan to continue that position. Just keep in mind, at some point this year, positive news will emerge with China, India, and other countries that need iron ore for building. It may take a while, but the upside to CLF far outweighs the downside. If CLF is going to have a down quarter, this first quarter may be it, then, I fully expect them to improve throughout the rest of the year.
Sentiment: Strong Buy