Why We’re Raising Our Price Estimate For Cliffs To $5
We are raising our price estimate for Cliffs Natural Resources to $4.96, which is driven by an improved demand outlook for the company’s U.S. Iron Ore division, which accounts for around three-quarters of the company’s revenue and most of its valuation. Cliffs announced a 3% upward revision to its shipment guidance for the U.S. Iron Ore division for 2016. This was driven by the signing of new supply agreements with ArcelorMittal and U.S. Steel Canada which has prompted the company to announce the restart of its United Taconite mining operations in Minnesota two months ahead of schedule in August. The signing of new supply agreements is also indicative of firming demand for steel in the U.S., driven by steady economic growth. As per World Steel Association forecasts, steel demand in the U.S. is set to grow at 3.2% and 2.7% in 2016 and 2017 respectively, following on from a contraction in demand in 2015. The improved outlook for steel in the U.S. also translates into an improved outlook for iron ore, the chief steelmaking raw material. We have accordingly modified our forecasts for the U.S. Iron Ore division, resulting in the revision in our price estimate.
- What’s New With Cleveland-Cliffs Stock?
- What’s Happening With Cleveland-Cliffs Stock?
- Why We Are Raising Our Price Estimate For Cleveland-Cliffs Despite A Weak Q4
- With Contracted Prices For 2023 Up, Is Cleveland-Cliffs Stock A Buy?
- Company Of The Day: Cleveland-Cliffs
- What To Expect From Cleveland-Cliffs Q3 Results?
Have more questions about Cliffs Natural Resources? See the links below.
- What Is Cliffs Natural Resources’ Fundamental Value Based On 2015 Results?
- What Is Cliffs Natural Resources’ Revenue And EBITDA Breakdown?
- How Has Cliffs Natural Resources’ Revenue Composition Changed Over The Last 5 Years?
- By What Percentage Did Cliffs Natural Resources’ Revenue & EBITDA Decline Over The Last 5 Years?
- By What Percentage Can Cliffs Natural Resources’ Revenue & EBITDA Change Over The Next 3 Years?
- How Will Cliffs Natural Resources’ Revenue Composition Change by 2020?
- How Do Cliffs Natural Resources’ Margins Compare With Those Of Iron Ore Mining Giants Such As Rio Tinto And Vale?
- Why ArcelorMittal Is The Most Important Customer For Cliffs’ U.S. Iron Ore Sales
Notes:
See More at Trefis | View Interactive Institutional Research (Powered by Trefis)