CLIFFS UP A FURTHER 22% SINCE MATASII HIGHLIGHTED CLF LAST FRIDAY - HERE'S WHY!
Cliffs Natural Resources is up another 22% since MATASII highlighted CLF last Friday (01-25-19). A significant reason for the move was Vale's Brazilian dam collapse.
SOURCE: 01-30-19: Why Is Cleveland-Cliffs Stock Soaring More than 15% Today?
As we had highlighted in How Vale’s Dam Burst Could Affect Iron Ore Prices, a dam ruptured at one of Vale’s (VALE) mines in Brazil. At least 65 people are confirmed to be dead, and many more are missing. This was the second such incident in the span of around three years. In November 2015, a dam jointly owned by Vale and BHP Billiton (BHP) burst, killing 19 people.
Vale announces production cuts
Today, Vale announced that it would cut ~10% of its output (or 40 million tons), as it plans to decommission all dams built by the upstream method. Vale is the largest iron ore miner in the world, and a cut of 40 million tons, if not replaced, could result in a tightening supply of high-grade iron ore.
Iron ore prices rise
Today, benchmark seaborne iron ore prices climbed to their highest level in nearly the last two years. According to Bloomberg, Singapore benchmark futures jumped ~10% today before settling at a 4% gain. Analysts also reacted to this news and hiked their price forecasts for iron ore. Goldman Sachs (GS) increased its three-month iron ore price forecast from $70 to $80 per ton.
Vale’s direct seaborne competitors, which include Rio Tinto (RIO) and BHP Billiton (BHP), also stand to benefit from higher iron ore prices. In Australian trading today, Rio’s price hit a 52-week high, while BHP rose 2.6%. While Cleveland-Cliffs exited the direct seaborne iron ore business in 2018, its stock price still takes cues from seaborne prices. Compared to CLF’s 15.5% gain, the S&P 500 Index (SPY) and the Dow Jones Industrial Average (DIA) were trading with gains of 0.53% and 1.12%, respectively, as of 11:00 AM EST.
LATEST MATASII CHART - 01-30-19
MATASII POST FRIDAY 01-25-19 BASED ON CLOSE 01-24-18
CLIFFS UP 25% SINCE YE 2018 AS INFRASTRUCTURE BEGINS TO DRAW ATTENTION AGAIN
Business Summary (yahoo Finance)
Cliffs Natural Resources Inc., a mining and natural resources company, produces and supplies iron ore. The company operates five iron ore mines in Michigan and Minnesota; and Koolyanobbing iron ore mining complex located in Western Australia, which produces lump and fines iron ore. It also own two iron ore mines in Eastern Canada. Cliffs Natural Resources Inc. sells its iron products to integrated steel companies and steel producers in the United States, China, Canada, and internationally. The company was formerly known as Cleveland-Cliffs Inc. Cliffs Natural Resources Inc. was founded in 1847 and is headquartered in Cleveland, Ohio.
CURRENT CHART: As of CLOSE 01-25-19
Cliffs Natural Resources was up 7.74% on Friday (01-25-19) being the biggest move of all our SII instruments. CLF is up 24.97% since December 31, 2018.
Cliffs has a high Beta of 1.65 within MATASII's highest Beta group, that of Infrastructure with 1.36 overall. Therefore major moves are normal and can be expected when they happen.
MATASII SII ORIGINAL ANALYSIS: CLF Cliffs Natural Resources: May 23rd, 2018
At the beginning of 2017 CLF broke out of an expanding wedge pattern and moved to a sideways consolidation (weekly chart, left). The boundaries of the sideways move offer potential trigger considerations, and these have been highlighted with solid orange. A price level of $9.50 has been given for the upper boundary, however note that the s/r is on a slight slope, and it is ultimately the break of the resistance that we are watching for. The same is true wrt the lower support and the $5.70 price given.
Previous highs and a blue (weekly) s/r zone above the market are the first target technicals to look towards ($11.50 - $12.00) if the market breaks up. IF we see a fall off and a break down through the lower supporting s/r then we would be looking towards the unfilled gap as a potential target level ($3.00).
Dashed arrows offer technical trigger considerations and potential moves to the next technical. Caution is advised when considering the technicals inside the sideways move as any of them could cause a market reaction (ie. reversal) when met.