Iron ore Iron ore is one of the main components in the production of steel. According to the United States Geological Survey (USGS), almost all iron ore (98%) is used for steelmaking. Iron ore is mined in nearly 50 countries, of which the seven largest producing countries account for three-quarters of the world's production. Australia and Brazil are the two largest iron ore exporters (mainly to China), each accounting for about one-third of total exports.
China is the largest importer and consumer of iron ore, and it is very important to pay close attention to the development of this market. The weekly iron ore shipments from Australia are on a downward trend, and there are operational and safety issues that restrict Brazil’s production and exports to China. These events have created a close balance between global supply and demand. Therefore, as port stocks have fallen to an eight-month low, China's iron ore prices have soared in the past few weeks. Strong iron ore prices have extended to the global market.
Iron ore is vital to the world's steel industry. During the coronavirus pandemic, steel producers were negatively affected by consumption freezes, economic shutdowns and supply chain disruptions. However, U.S. steel demand has rebounded from the low point of the epidemic and is showing a V-shaped recovery. Steel prices will start in 2021.
Entered a multi-year high in 2015. In addition, President Biden hopes to invest billions of dollars in roads, bridges, airports, railways, renewable energy, power grids, and other major infrastructure projects, and has received initial bipartisan support last week. If a large-scale infrastructure expenditure bill is passed, it may increase the sales and income of leading companies in the basic materials and industrial sectors.
When analyzing a company, it is useful to have an objective framework that allows you to compare companies in the same way. This is one of the reasons AAII created the A+ stock grade. It evaluates companies based on five factors that have been proven to identify market-leading stocks over the long term: value, growth, momentum, earnings forecast revisions (and surprises), and quality.
The table below summarizes the attractiveness of three metals and mining stocks—Cleveland Cliffs, Rio Tinto, and Vale—using AAII's A+ stock rating.
Cleveland-Cliffs (CLF) is a vertically integrated producer of iron ore and steel products. The company has upstream and downstream businesses. It provides customized iron ore pellets and steel solutions. Cleveland-Cliffs is the largest flat steel company in North America and the largest producer of iron ore pellets.
Its sectors include steel and manufacturing as well as mining and pelletizing. Its steel and manufacturing divisions are producers of carbon steel, stainless steel and electrical steel products, mainly used in the automotive, infrastructure and manufacturing, and distributor and converter markets. The company's steel and manufacturing division includes subsidiaries that provide customers with carbon steel and stainless steel pipe product solutions, engineering solutions, tool design and manufacturing, hot stamping and cold stamping steel components, and complex components. Its mining and pelletizing division is an iron ore pellet supplier for the North American steel industry, with mines and pelletizing plants in Michigan and Minnesota.
The company has large exposure to difficult-to-manufacture steel products, but limited exposure to bulk steel products such as hot rolled coils. Since President Biden announced the initial infrastructure deal, the price of hot rolled steel coil has more than tripled in the past year, setting a record high of over US$1,800 per short ton this week.
Cleveland-Cliffs has a value grade of D and is considered expensive based on its 61 points. The company’s value score is among the best in several traditional valuation metrics, with a shareholder return score of 91, a price-to-book ratio of 69, and an enterprise value to Ebitda (EV/Ebitda) ratio of 61 (remember that the score is the lower the value The better). Successful stock investment involves buying low and selling high, so stock valuation is an important consideration for stock selection.
The value ranking is the percentile average of the above-mentioned valuation indicators and the percentile ranking of the price-earnings ratio, price-to-sales ratio, and price-earnings ratio.
Based on its 83-point momentum score, Cleveland-Cliffs' momentum rating is A. This means that it ranks at the forefront of all stocks in terms of weighted relative strength over the past four quarters. The weighted fourth quarter relative strength ranking is the relative price change in each quarter of the past four quarters.
Earnings forecast revisions show analysts’ views on the company’s business
Post time: Jul-13-2021