Dallas, Texas 06/29/2015 (Financialstrend) – Cliffs Natural Resources Inc (NYSE:CLF) appear to be under pressure, as prices of coal continue their southward journey. Meanwhile, iron ore prices have now stabilized, leading to further pressure on companies such as Cliffs Natural Resources Inc. Incidentally, the company is currently trading at close to its multi-year lows in line with many of its coal mining peers.
However, Cliffs CEO in a speech at the Steel Success Strategies stated that the present predicament is due to the Australian issue. He claims that there has been no ‘oversupply’ by Australian producers as they have not brought excessive iron ore to the market. He added that the producers in Australia have actually simulated oversupply leading to drop in iron ore prices.
He also added that the ploy of ‘inflating forecasts’ was adopted to incorporate expenses which were frivolous. He ended his speech, claiming that his company would end its Australian venture and in about three years and will be out of the ‘seaborne’ markets. His company would then focus on producing for the domestic markets, as he felt Cliffs Natural Resources Inc (NYSE:CLF) dominates as a low-cost pellet producer.
In recent times the metal coal prices have been under tremendous pressure, even as the iron prices retained momentum and did not fall to the same price points as the metal coal business. Meanwhile Cliffs has been attempting to quit the metal coal business and has already been successful with the sale of Logan County Coal at the start of the year. However, the current prices of the industry are not likely to fetch good prices for its other mines. The Australian mines would be under its ownership until they run out of ore, it is forecast.
However, experts believe Cliffs Natural Resources Inc (NYSE:CLF) is set for an upside in the long term. This is because by exiting the seaborne market and focusing on the domestic market, it will be able to balance its resources.