Cliffs Down 12% Today, 51% in 2013

Cliffs Natural Resources (CLF) is having yet another terrible day, with its stock down more than 12%. The company has lost 51% in 2013.

Cliffs faces a number of challenges, not least the�falling price of iron ore, but today’s decline seems to have been precipitated by a couple of very negative analyst notes from Morgan Stanley and Credit Suisse.

Cowen Securities analyst Anthony Rizzuto also came out with a note this morning, after meeting with Cliffs CEO Joe Carrabba yesterday. Rizzuto, who has a Sell rating and $20 price target for Cliffs, writes:

We believe the company is taking a somewhat aggressive stance related to oncoming supply in the industry. It is our opinion that projects underway at BHP Billiton (BHP), Rio Tinto (RIO), Fortescue Metals Group (FSUMF), Vale (VALE), etc. are real and are coming, and we believe they will make a meaningful impact on the overall market. Management believes that decisions made by the global iron ore producers today to move away from greenfield investment could lead to a supply crunch over the medium term. Clearly only time will tell, but we believe that projects that are already underway (and have a high likelihood of completion) will have the more meaningful impact.

The $65/mt cash cost goal at Bloom Lake appears to be more of a 2015 reality on a run-rate basis. Though some aspects of the expansion are currently progressing, the company expects a short-term cost escalation and a roughly 6-month ramp-up period once the concentrator starts up in mid-2014.

The company is actively investigating its potential opportunities to supply DRI pellets, which it sees as a growth industry. There are two facilities (Northshore and United Taconite), where testing is already underway.

Operations at the company’s coal assets appear to have stabilized, though management expects roughly breakeven results until market prices for met coal improve.