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Cliffs Natural Resources: How The U.S. Iron Ore Segment Is Affected By Steel Prices, Platts Iodex And Other Factors

Cliffs Natural Resources' (CLF) U.S. Iron Ore segment is the most important component of its business. It has buffered Cliffs against part of the decline in iron ore prices due to the way the pricing in its contracts works. Only a minority portion of its U.S. Iron Ore realized pricing is tied to Platts Iodex (benchmark pricing for 62% Fe Iron Ore Fines CFR China). However, this makes it a bit difficult to understand how the U.S. Iron Ore segment's realized pricing may vary. I am going to tackle that question in this article, at least for coming up with reasonable estimates for the realized pricing. Cliffs has disclosed various components of the equation in its SEC filings and conference calls, but there are still some details that are confidential.

Sensitivity to Platts Iodex

The U.S. iron ore revenue sensitivity to Platts Iodex appears to be roughly $2.2 for every… Read More …