Production Halting Cliffs Natural Resources Inc (NYSE:CLF) Loses Its Way On The Charts

[[tagnumber 0]][[tagnumber 1]]Cliffs Natural Resources Inc (NYSE:CLF) may have announced plans to stop digging for iron ore over the next four months in an attempt to optimize its inventory but that does not mean that its stock price will stop digging deeper down the charts, too. What is more, considering that the iron ore producer will now be spending 150% of its Q3 2015 income per month to keep two of its mines in idle mode, further chart failures might become the norm soon.[[tagnumber 2]] [[tagnumber 0]]Yesterday, shares of Cliffs Natural Resources tumbled dangerously close to their late–July 52–week low of around $2.30 per share. Closing trade at 2.36, CLF dropped lost yet another 12.27% after shifting a volume of 8.3 million. The slump came hard on the heels of the impending Dec. 1 closing of its Northshore iron ore pellet production plant. Scheduled to remain idle throughout the first calendar quarter of 2016, the halt is expected to bring about as many as 450 layoffs, the implication being that 83% of the facility‘s total workforce will be relying on unemployment benefits waiting for more favorable steel market conditions. For the latter are of crucial importance for the inventory–laden mining facility should its management intend to resume full–scale production come April 2016.[[tagnumber 2]] [[tagnumber 0]][[tagnumber 6]]As of Sep. 30, CLF‘s total inventory was worth close to $470 million, almost twice as much as the miner‘s cash reserves. Compared to the three preceding quarters, however, it marked a fair improvement. Not big enough, though, as it has now turned out.[[tagnumber 2]] [[tagnumber 0]]With the per–month accompanying costs relating to the production halt evaluated at $9 million, Cliffs‘s benefits will arise mainly from lower COGS, as well as reduced general and administrative costs. To realize a higher operating profit, however, the company will still need to rake in quarterly revenues in excess of $500 million. We will keep a close eye on CLF and its forthcoming Q4/FY2015 report.[[tagnumber 2]] [[tagnumber 0]]Until the 10–K form sees the light of day, CLF seems poised to continue to sharply divide shorters and insiders, for the former have been betting against the stock while the latter taking higher stakes over the last 12 months. At least, that‘s what an average days–to–cover ratio of 8.5 and net insider purchases in excess of 1.56 million allude to. As far as analysts are concerned, those rating CLF a hold and/or a sell are prevailing at the moment and even though CLF shares have somewhat gone up to $2.45 at the end of the current session, a less than 4% appreciation seems unlikely to change their minds.[[tagnumber 2]]