Feb 16 (Reuters) - Cliffs Natural Resources believes China will increase its steel production this year, boosting demand for raw materials like iron ore and coking coal, the company’s two major products.
“We believe the world’s emerging economies will continue to urbanize, and as a direct result will continue their need to produce record amounts of steel,” Cliffs Chief Executive Officer Joseph Carrabba said on Thursday.
He said he believed China’s monetary policy is likely to ease and that the nation’s growth, already strong by Western standards, will continue.
“In China, we anticipate crude steel production to reach 730 million tons in 2012,” Carrabba told Wall Street analysts on a conference call. “This 7 percent increase from 2011, coupled with a steadily improving outlook for the U.S. economy, will continue to support demand for steel-making raw materials.”
On Wednesday, Cleveland-based Cliffs, the largest producer of iron ore pellets in North America, reported a fourth-quarter profit that missed Wall Street expectations, mostly because of higher costs.
Its shares slipped 0.3 percent to $68.47 in afternoon trading on the New York Stock Exchange on Thursday.
Carrabba said that during the fourth quarter, North American steelmaking utilization rates averaged 74 percent.
“Despite the fact production in our customers’ end products including autos, white goods (appliances), heavy machinery and construction remained below historical level, today’s utilization rate is expected to sustain a healthy demand for our products.”
He said that supports Cliffs’ anticipated 2012 U.S. iron ore sales volume target of around 23 million tons — about the same as last year’s volume.