Cliffs shares drop for 3rd straight day
Shares of Cliffs Natural Resources fell Wednesday for the third day in a row as investors worried about lower prices and volumes amid weak demand.
THE SPARK: Cliffs last week said that it will delay the expansion of one of its mines and idle production at two of its iron ore operations due to price declines. Because of those halts, Cliffs cut its sales volume forecast for 2013 for one type of iron ore.
THE BIG PICTURE: Iron ore is used in blast furnaces as part of the steel-manufacturing process. Iron-ore prices have fallen sharply as the global steel industry has struggled with tepid demand and plentiful supplies.
In Cliffs' most recent quarter, profit fell 86 percent as prices for its iron ore dropped while labor and mining costs rose.
THE ANALYSIS: Broader economic trends aren't looking better for Cliffs, said KeyBanc Capital Markets analyst Mark Parr in a note from Tuesday. And without a rebound in iron ore prices, investors may become worried about the company's ability to pay its dividend. That concern could extend the long-running decline in the company's share price.
SHARE ACTION: Shares fell 81 cents, or 2.7 percent, to $29.20 in afternoon trading. Shares had already dropped nearly 4 percent this week and are off 52 percent this year.
