No bias, just who pays them. When I was in product development, most of my advertising budget was spent on "experts" to place my product in the media. It is funny, place a guy in a white medical coat and he comes across as a doctor whereas he is really a Realtor, I know this because he was my Realtor in my construction business.
I was right on the 20th, it didn't hold and went up allowing me to reach a fair profit for my day trade. On the other hand I was wrong today and got stopped out with a $500 loss.
I agree with you on this, should have dumped their Australian operation along with Wabush at any price. Then he should have moved BL into bankruptcy and all of this would have been behind us now with $1.5 billion trimmed off the balance sheet. And CLF would be well on their way to earn $800 million in 2015. Really thought Casablanca clearly laid this out ahead of the proxy vote.
Several things need to happen:
1. Announce sale of BL.
2. Debt has to be reduced by $300 million.
3. Earnings beat.
4. I would like an independent audit of their long term contracts to get a full disclosure of where their revenue is locked over the next year or two.
What you have is a steel industry that is moving away from 62% fines and going with iron ore pellets made from locally supplied low quality iron ore pellets. The US almost rely 100% on iron ore pellets and India has a large pellet market as they need to process their huge domestic supply of low quality iron ore. China is moving in that direction as the need to clean up their air quality is a dominate issue as well as reducing their imports of iron ore. Processing cost and transportation fees will bring Rio and BHP down to the rest of the market when they change over to pellets and the demand for 62% fines will be very low. CLF needs to be totally out of iron ore fines now as you point out, it isn't going to get any better.
Same applies to oil, the price is tied to the cost of production of the oil shale fields in the US. Technological advances is pushing the cost of production below $40 now and can easily be at $25 with a wide spread pipeline system. So look for low cost oil in the future as well.
The markets are shifting and the winners will be the ones that can make the move. With iron ore, CLF is a leader with its pellet and DRI lines.
The fall in iron ore has been in the making for 3 years and is hammering a company like CLF. It seems to me that it impacts seaborne 62% ore where it has a minimal impact on value added iron ore pellets. As I see it, companies that the majority of their production is with 62% should be hammered and a company like CLF should be insulated from this fall. Once CLF gets totally out of the China seaborne business, these analyst will continue to tie CLF's future performance to this business.
Yeah, but these countries are not in the Euro. The biggest importers of steel into the US is Canada, Korea, Russia, Brazil and then Eastern Europe, China, Germany, UK. Looking into it, about 57% of all US steel demand is filled by imports, a number that surprised me but is a number the US can improve on.
From Mining Guru this morning:
"Bloomberg reported that iron ore declined to the lowest level in more than 5 years amid speculation that mills in China will reduce steel output in the runup to a holiday next month, curbing demand from the biggest user and worsening a glut.
According to Metal Bulletin Limited, ore with 62% content delivered to Qingdao, China, dropped 1.5% to USD 66.79 a dry tonne, the lowest level since June 2nd 2009. Prices are headed for a third consecutive weekly loss.
The commodity sank 47% last year as BHP Billiton Limited, Rio Tinto Group and Vale SA raised low-cost output in Australia and Brazil, spurring a surplus. While China’s economy expanded 7.4% last year, in line with Premier Li Keqiang’s target, that’s the slowest pace since 1990. Steel production in the world’s largest producer grew at the slowest rate on record in 2014 amid a slowdown in the country’s property market."
If the spot price of 62% seaborne is $60, the spot price of iron ore pellets would be $90. 2015 US contracts have pellet prices locked in at $100… I don't see a problem for CLF. As far as BL goes, I think CLF will make more cash and reduce total liabilities through bankruptcy.
This is a great trading stock with these huge moves up and down. At some point CLF's performance will lead the stock up. We are close, there has been a lot of buying of CLF's bonds since the first of the year and I expect a sizable reduction in total debt when Q4 earnings is announced.
Again, this stock is news driven and after earnings, there will be a lot of announcements as the quite period comes to an end. A BL sale will take this stock to $12, debt reduction will take it over $15 and solid profits will put CLF in a short squeeze. Right now LG is fighting the shorts with his hands tied and that is why they are throwing as many punches as they can right now. After Feb 2, the gloves come off!
Debt structure limits interest expense and hedges protects revenue for the next two years. Reality is finally taking over baseless speculation.
That is half of it, the stock is news driven up and down. Positive news about BL, it goes up. Negative news about the strong dollar and US steel demand, the stock goes down. It is being pushed and pulled in each direction, just need people here that are in front of these moves.
I have not figured out why a weak Euro would cause dumping in the US as the cost of steel production in Europe is so high that even a weaker Euro would not give them any advantage. So the dumping comes from China and S. Korea and that should be easily addressed.
The US should increase spending on infrastructure and pay for it with freshly printed dollars to keep the dollar from gaining too much strength.
Has more to do with the downturn in CLF today than anything else. Concern is about increasing imports of steel into the US will impact iron ore demand. The US will not sit idle, look for the Fed not to increase interest rates at all in 2015 and move to increase the money supply to finance infrastructure builds. A worldwide currency war will result in future inflation and strong commodity prices.