Cliffs Natural Resources Inc., the biggest U.S. iron-ore miner, jumped the most in more than seven years after first-quarter earnings exceeded estimates and the company announced supply-contract renewals with steelmakers.
Cliffs rose 25 percent to $5.39 at 4 p.m. in New York, the biggest gain since November 2008. The closing price was the highest since June. The Cleveland-based company’s shares have more than tripled this year as commodities including iron ore rallied.
Cliffs cut its cash production costs by more than a quarter in the U.S. and Asia, and Chief Executive Officer Lourenco Goncalves said in a statement that “consistent signs of a real recovery” in the domestic steel market are helping bolster orders at clients. The company boosted its capital spending forecast as it develops a new iron-ore pellet with ArcelorMittal, and reached a supply agreement with U.S. Steel Canada.
Cliffs “has leverage to a rapidly improving domestic steel market,” Anthony Rizzuto, a New York-based analyst at Cowen & Co. LLC, said in a note Thursday.
Cliffs increased its 2016 capital expenditures expectation to $75 million from its previous projection of $50 million. The investment required to produce the new pellet with Luxembourg-based ArcelorMittal is part of the revised forecast, Goncalves said on a conference call with analysts.
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