The weak stock performance in the mining sector contrasts with the S&P 500 (SPY) and Nasdaq (QQQ) trading near their all-time highs. Stock markets are bracing for a global recession. This hurts the demand for raw materials.
The slowdown in sales of electric vehicles does not show any signs of change. Lithium prices continue to trade at well below their highs from over a year ago. As a result, Albemarle (ALB) traded a prices not seen since 2020. ALB stock closed at a forward P/E in the low 20s. This multiple will rise as project earnings fall.
Short-sellers hold a 12.32% short interest on this stock.
Cleveland-Cliffs (CLF), an iron ore producer, risks falling further. The firm upsized and priced another $600 million aggregate principal amount of Senior Guaranteed Notes. These are due in 2032. The notes will pay interest at a rate of 7.0% annually. Cliffs needs the proceeds to fund its Stelco acquisition. Investors are fearful that the higher debt will hurt the company’s prospects.
BHP Group (BHP) may revisit the $30 - $40 level not seen since 2020. Last week, iron ore extended its decline at prices last seen in 2022. China might cut steel production by around 9% to 82.9 million tons. It is the largest importer of seaborne iron ore.
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