Cliffs upbeat on ore as coal margins compress

Apr 26, 2012 | 03:03 PM | Lisa Gordon

Tags  iron ore, Cliffs Natural Resources, Joseph Carrabba, Laurie Brlas, quarterly earnings, Lisa Gordon

PITTSBURGH — Steady business conditions in the global and domestic steelmaking sector should sustain healthy demand for iron ore in the near term, although domestic metallurgical coal prices have come under pressure, Cliffs Natural Resources Inc. said as it reported lower first-quarter net income.

Cliffs’ iron ore assets are enjoying higher shipping volumes, but face margin pressure as the pricing environment was much stronger in the first quarter of 2011, Laurie Brlas, chief financial officer and executive vice president of finance and administration, told investors during a conference call.

U.S. iron ore sales volumes rose 19.6 percent during the quarter, eastern Canadian volumes up more than twofold and Asia Pacific ore volumes increased 24.9 percent. However, U.S. iron ore sales margins of $49.39 per long ton in the first quarter fell 61.4 percent from $127.90 per ton in the same year-ago period. Margins in eastern Canada drifted into the red at a loss of $7.55 per tonne vs. a $47.26-per-tonne profit in the year-ago period, partially due to a fire that forced a 10-day outage at Bloom Lake; and Asia Pacific margins slid by 48.9 percent. ....