We are downgrading our rating on Cliffs Natural Resources (CLF) to Underperform following its lackluster third-quarter 2012 results. Earnings fell well short of the Zacks Consensus Estimate while profit slid roughly 86% on account of lower iron ore pricing and higher costs. Revenues declined at a double-digit clip and missed the Zacks Consensus Estimate. The company cut its U.S. iron ore and North American coal sales volume forecasts for 2012 factoring in the volatile pricing environment. Cliffs remains hamstrung by lower iron ore pricing, partly due to the slowdown in Chinese demand and oversupply in the industry. The prices for commodities are expected to remain under pressure due to the uncertain economic environment. The company also contends with higher labor and mining costs.