CLF
T3Cleveland-Cliffs Inc.
OverviewCleveland-Cliffs Inc. is North America's largest flat-rolled steel producer, operating a fully integrated supply chain from iron ore mining to finished steel pr
Cleveland-Cliffs Inc. is North America's largest flat-rolled steel producer, operating a fully integrated supply chain from iron ore mining to finished steel products. They serve automotive OEMs (like Toyota), infrastructure, and manufacturing. Revenue is split across fixed-price contracts (43%), month-lag (23%), quarter-lag (7%), U.S. spot (12%), and Canadian spot (15%), with Canadian pricing at a significant discount.
- What They Do (Plain English & Analogies)
- Cleveland-Cliffs Inc. is like a fully integrated baker who owns the wheat fields, the flour mill, and the bakery. They handle the entire process of making steel, from digging up the raw materials (iron ore) from their own mines to producing various finished steel products. They are a major supplier of these steel products, especially to car manufacturers, as well as to companies building infrastructure, making other manufactured goods, and to other steel producers. They essentially control the whole journey of steel, from earth to end-product. They are the largest flat-rolled steel producer in North America and the largest supplier of automotive steel in the U.S., focusing on high-quality, technologically advanced steel products.
- Very Brief History
- Founded in 1847 as Cleveland Iron Company in Cleveland, Ohio, Cleveland-Cliffs Inc. initially focused on iron ore mining. Over time, the company evolved significantly, transforming into a fully integrated steelmaker through strategic acquisitions, notably the U.S. operations of AK Steel in 2020 and ArcelorMittal in December 2020. In August 2017, the company officially returned to its current name, Cleveland-Cliffs Inc.
- "Street Stereotype"
- Cleveland-Cliffs is generally perceived by investors and analysts as a domestic steel producer that significantly benefits from U.S. trade protection policies, such as Section 232 tariffs, which help safeguard the domestic market from foreign imports. The company is also seen as a key player in the automotive steel market, with a focus on high-quality, advanced steel products. However, it also carries a stereotype of being exposed to market volatility, energy cost fluctuations, and sometimes facing concerns regarding profitability and free cash flow, leading to a consensus 'Hold' rating from analysts. Recent market reaction suggests skepticism or focus on near-term cost pressures and the delayed POSCO deal, contradicting the company's optimistic messaging.
- Subsidiaries On Linked In*
- Stelco — Canadian subsidiary; LinkedIn: stelco-inc
- Ferrous Processing & Trading Co. — Scrap processing and trading; LinkedIn: ferrous-processing-&-trading-co.
- Cannon Automotive Solutions — Tooling and stamping brand/division; LinkedIn: cannon-automotive-solutions
- The Electromac Group — Tooling and stamping brand/division; LinkedIn: the-electromac-group
- Customer Sectors & Example Clients
- Cleveland-Cliffs serves customers across several key sectors, including automotive, infrastructure and manufacturing, distributors and converters, and other steel producers. A notable specific client mentioned is Toyota, which awarded Cleveland-Cliffs the Toyota Quality Excellence Award. Other major automotive OEMs served include General Motors, Ford, and Stellantis.
- New Customers / Segments They'Re Targeting
- The company is actively targeting a shift from aluminum to steel in various sectors, including automotive, building products, appliances, and truck trailer sectors. Automotive OEMs are increasingly prioritizing supply certainty, total cost, and safety, leading them to gravitate towards Cliffs Steel. This includes demand for advanced high-strength steels (AHSS) and VerdeX steel for electric vehicles.
- Supply Chain And Sourcing Geographies
- Cleveland-Cliffs operates a vertically integrated supply chain, sourcing its primary raw material, iron ore, from its five iron ore mines located in Minnesota and Michigan, United States. The company also produces hot-briquetted iron (HBI) at its Toledo HBI Plant in the U.S., which began production in 2020. Energy, including natural gas and diesel, is a significant input for its mining and steelmaking operations, primarily sourced within the Midwest U.S. While the company is analyzing potential in rare earth minerals, the domestic refinement infrastructure for these critical minerals in the United States is currently very limited, and Cleveland-Cliffs does not intend to pursue refinement itself.
- Sales Geographies And Expansion Plans
- The company primarily sells its products in North America, with significant operations and sales in the United States and Canada, specifically through its Canadian subsidiary, Stelco. Over 95% of its 2024 revenue was generated within North America, with the strongest market share held in the Great Lakes region due to proximity to automotive plants. Management's discussions emphasize strengthening 'Fortress North America' through trade enforcement, indicating a continued focus on the domestic market rather than explicit plans for sales expansion into new international geographies.
- How Key Themes May Help/Hurt
- The 'Energy Bottlenecks' theme presents both opportunities and challenges for Cleveland-Cliffs. The increasing demand for power and specialized materials, driven by AI and electrification, benefits Cliffs through its production of electrical steel, such as MOTOR-MAX® for electric vehicles, and its Butler Works electrical steel expansion project. The disruption of global freight lanes and energy price volatility, exacerbated by geopolitical events, strengthens the position of domestic steel producers like Cleveland-Cliffs by making imported steel structurally more expensive. However, as an energy-intensive industry, Cleveland-Cliffs is vulnerable to spikes in energy costs, as evidenced by the $80 million negative impact to EBITDA in Q1 2026 due to extreme cold weather and high energy prices. Competition for power with energy-hungry AI data centers could also lead to higher input costs.
3 Main Long-Term Bull Details
- Robust trade enforcement and 'melted and poured' mandates are effectively limiting steel imports into the United States, creating a more predictable and resilient domestic market, which Cleveland-Cliffs is well-positioned to capitalize on. 2. There is a significant and growing trend of automotive OEMs and other sectors (building products, appliances, truck trailers) substituting aluminum with steel, driven by a prioritization of supply certainty, total cost, and safety, which directly increases demand for Cleveland-Cliffs' steel products. 3. Strategic investments in modernization, such as the Butler Works electrical steel expansion and the Middletown Works blast furnace configuration, coupled with the integration of AI into production planning, are expected to enhance efficiency, improve cost performance, and strengthen long-term competitiveness.
3 Main Long-Term Bear Details
- The company faces significant exposure to volatility in energy costs (natural gas, electricity, diesel) and raw material prices (scrap), which can materially impact profitability, as evidenced by the $80 million negative impact in Q1 2026. 2. The Canadian steel market, where its subsidiary Stelco operates, is currently oversupplied with foreign steel, leading to a substantial discount in Canadian selling prices compared to the U.S. market, which negatively affects Stelco's profitability. 3. The upcoming renegotiation of the labor agreement with United Steelworkers introduces uncertainty and potential for disruptions, requiring a balance between rewarding the workforce and ensuring the company's competitiveness and long-term sustainability.
- Competitors And Differentiation
- Cleveland-Cliffs' main competitors in the steel industry include Nucor (NUE), Steel Dynamics (STLD), U.S. Steel, ArcelorMittal, Commercial Metals (CMC), Reliance (RS), and Worthington Enterprises (WOR). The company differentiates itself through its vertical integration, controlling the entire steelmaking process from iron ore mining to finished products. It focuses on high-quality, technologically advanced steel, particularly for the automotive sector, and emphasizes reliability, quality, and domestic supply chain certainty, which is becoming increasingly important to customers. Its scale in pellets and HBI, and focus on automotive-grade flat-rolled alloys also set it apart from commodity mills.
- Recent Performance & What The Market'S Focused On
- Cleveland-Cliffs reported Q1 2026 revenues of $4.9 billion, a $600 million increase from the prior quarter, and steel shipments of 4.1 million net tons, a 338,000 increase sequentially. Adjusted EBITDA was $95 million, inclusive of an $80 million one-time energy cost impact due to extreme cold weather. The company recorded a GAAP net loss of $229 million. Average selling prices increased by $55 per ton sequentially. Free cash flow was negative due to working capital timing, primarily a large receivable build. Liquidity stood at $3.1 billion. Management expects significant sequential improvement, with Q2 shipments increasing and selling prices up approximately $60 per ton from Q1 to Q2. Q2 costs are anticipated to tick up by $15 per ton due to outages and a richer product mix before falling meaningfully in the back half of the year. The company maintains its full-year 2026 steel shipment guidance of 16.5-17.0 million net tons and expects to receive $425 million from idle property sales. The market is focused on the company's ability to sustain pricing, manage cost pressures, the progress of the POSCO deal, and the upcoming labor agreement renegotiation.
- Revenue Segments And Estimated Mix
- Fixed full year price (with resets) — Mix: 43%; Source: Q1 2026 earnings transcript
- Linked to month-lag indices — Mix: 23%; Source: Q1 2026 earnings transcript
- Linked to quarter-lag indices — Mix: 7%; Source: Q1 2026 earnings transcript
- U.S. spot price — Mix: 12%; Source: Q1 2026 earnings transcript
- Stelco (Canada) spot price — Mix: 15%; Source: Q1 2026 earnings transcript; Trend: Canadian pricing at 40% discount to U.S. pricing in Q1 2026
- Product Brands
- MOTOR-MAX®
- FORMTUBE®
- ULTRA FORM®
- THERMAK®
- CHROMESHIELD®
- NEXMET®
- ULTRALUME®
- NITRONIC®
- The Electromac Group®
- Electromac Tool®
- Fleetwood Metal Industries®
- Cannon Automotive Solutions®
- H. Beck Machinery®
- FMI®
- Fleetwood Metal®
- GALVALUME®
- 11 Cr-Cb™
- 15 Cr-Cb®
- 18 Cr-Cb™
- 13-4 SR®
- 18 SR®
- 17-4 PH®
- 15-5 PH®
- 17-7 PH®
- PH 15-7 Mo®
- NITRONIC® 19D
- 2205 Duplex
- 420 ULTRA HONE®
Bull / Bear DetailsCleveland-Cliffs is positioned for sustained improvement in 2026, driven by robust U.S. trade enforcement, surging automotive demand, and a significant industry
Thesis
Cleveland-Cliffs is positioned for sustained improvement in 2026, driven by robust U.S. trade enforcement, surging automotive demand, and a significant industry shift from aluminum to steel. Strategic investments and AI integration enhance efficiency. While Q1 faced energy cost headwinds and the Canadian market remains challenged, strong Q2/Q3 cash flow and a less urgent stance on the POSCO deal underscore a strengthening domestic outlook. (Updated: 2026-04-24)
Bull case
Robust U.S. trade enforcement, including Section 232 and derivative product tariffs, is effectively limiting steel imports to their lowest levels since 2009. This creates a resilient domestic market, allowing Cleveland-Cliffs to operate with a full order book, tight production schedules, and extended lead times, leading to increasing pricing strength flowing into Q2 and Q3 results.
A significant and accelerating trend of automotive OEMs and other sectors (building products, appliances, truck trailers) is substituting aluminum with steel. This shift is driven by a prioritization of supply certainty, total cost, and safety, directly increasing demand for Cleveland-Cliffs' high-quality steel products and improving product mix.
Strategic investments in modernization, such as the Butler Works electrical steel expansion and the Middletown Works blast furnace configuration, coupled with footprint optimization and the integration of AI into production planning, are enhancing efficiency, improving cost performance, and strengthening long-term competitiveness and earnings power.
Bear case
The company faces significant exposure to volatility in energy costs (natural gas, electricity, diesel) and raw material prices (scrap), as evidenced by the $80 million negative impact in Q1 2026 and an expected $15 per ton cost increase in Q2 due to carryover, outages, and war-related freight costs.
The Canadian steel market, where its subsidiary Stelco operates, remains oversupplied with foreign steel, leading to a substantial 40% discount in Canadian selling prices compared to the U.S. market, which negatively affects Stelco's profitability and overall company performance.
Uncertainty surrounds key strategic and operational initiatives, including the delayed conclusion of the POSCO transaction due to geopolitical factors, and the upcoming renegotiation of the labor agreement with United Steelworkers, which could impact competitiveness, flexibility, and potentially lead to disruptions.
Bull / Bear Case
- Bear Case
- Cleveland-Cliffs faces significant exposure to volatility in energy costs (natural gas, electricity, diesel) and raw material prices (scrap), as evidenced by the $80 million negative impact in Q1 2026 and an expected $15 per ton cost increase in Q2. The Canadian steel market, where its subsidiary Stelco operates, remains oversupplied with foreign steel, leading to a substantial 40% discount in Canadian selling prices compared to the U.S. market, negatively affecting profitability. The company is currently unprofitable on a trailing twelve-month basis, with negative P/E and free cash flow yield, indicating ongoing operational challenges and capital destruction. Uncertainty surrounds key strategic initiatives, including the delayed POSCO transaction due to geopolitical factors, and the upcoming renegotiation of the labor agreement with United Steelworkers, which could impact competitiveness and operational flexibility.
- Bull Case
- Cleveland-Cliffs is poised for sustained improvement in 2026, driven by robust U.S. trade enforcement, which has limited steel imports to their lowest levels since 2009, creating a resilient domestic market. The company benefits from a full order book, tight production schedules, and extended lead times, leading to increasing pricing strength expected in Q2 and Q3. A significant and accelerating trend of automotive OEMs and other sectors substituting aluminum with steel, prioritizing supply certainty and total cost, is directly increasing demand for Cliffs' high-quality steel products. Strategic investments in modernization, such as the Butler Works electrical steel expansion and Middletown Works blast furnace configuration, coupled with footprint optimization and AI integration into production planning, are enhancing efficiency, improving cost performance, and strengthening long-term competitiveness. Management expects Q2 and Q3 to show significant sequential improvements in EBITDA and cash flow.
- More Compelling & Why
- Bear. Despite management's optimistic outlook, the stock has underperformed the SPY post-earnings, and current valuation metrics like the negative TTM P/E ratio (around -4.06) and negative free cash flow yield (-11.36% to -14.4%) indicate significant unprofitability and cash burn. The strongest argument for the bear case is the persistent negative free cash flow and earnings, suggesting that operational improvements and market tailwinds are not yet consistently translating into shareholder value. My view would flip to bull if the company demonstrates sustained positive free cash flow generation and a return to profitability on a TTM basis, supported by tangible evidence of cost control and improved Canadian market conditions.
Key Factors
| Key Factor | Why It Matters | What To Watch | What It Signals | Where/How To Track | Free Alt Data | Paid Alt Data |
|---|---|---|---|---|---|---|
| Q2 and Q3 2026 Financial Performance (Adjusted EBITDA, Steel Shipments, Average Selling Price) | These metrics directly reflect Cleveland-Cliffs' operational execution, market demand, and pricing power, validating management's optimistic guidance for sustained sequential improvement and strong earnings power in the latter half of 2026. | Q2 2026 Adjusted EBITDA (vs. Q1's $95M), Q2 2026 Steel Shipments (expected to improve from Q1's 4.1M tons), and Q2 2026 Average Selling Price (expected to be up ~$60/ton from Q1). Also, any updates on Q3 expectations. | Bullish: Q2 Adjusted EBITDA significantly exceeds Q1, Q2 shipments are above 4.1M tons, and average selling prices increase by $60/ton or more. Q3 guidance indicates further substantial improvement. Bearish: Q2 Adjusted EBITDA, shipments, or average selling price fall short of management's stated expectations, or Q3 outlook is weaker than anticipated. | Cleveland-Cliffs Q2 and Q3 2026 Earnings Releases and Conference Calls. | Industry reports on North American steel production and pricing (e.g., American Iron and Steel Institute - AISI), major financial news outlets covering the steel sector. | S&P Global Platts: North American HRC price index; CRU: North American Steel Market Outlook. |
| Idle Property Sales Proceeds | These sales are crucial for strengthening the balance sheet, improving the leverage position, and generating non-operating cash flow, supporting the company's financial flexibility and long-term objectives. | Announcement of $50 million in cash proceeds from idle property sales in Q2 2026, followed by $100 million in Q3 2026, as guided by management. | Bullish: Cash proceeds from idle property sales meet or exceed the $50M target in Q2 and the $100M target in Q3. Bearish: Delays in closing these sales, or actual cash proceeds fall short of the guided targets for Q2 or Q3. | Cleveland-Cliffs Q2 and Q3 2026 Earnings Releases and Conference Calls, company press releases regarding asset sales. | Local real estate news in areas where Cliffs has idle properties (e.g., Toledo, Gary, Burns Harbor). | CoStar Group: Commercial real estate transaction data in relevant regions. |
| United Steelworkers (USW) Labor Agreement Renegotiation Outcome | The labor agreement impacts a significant portion of the company's workforce and operating costs. A favorable, timely resolution ensures operational stability and supports competitiveness, while a prolonged dispute could lead to disruptions. | Any announcements or updates from Cleveland-Cliffs or the USW regarding the progress, terms, or completion of the labor agreement renegotiation in the 'coming months.' | Bullish: A mutually satisfactory agreement is reached in a timely manner, ensuring competitiveness, flexibility, and long-term sustainability without significant disruptions. Bearish: Negotiations become protracted, leading to public disputes, potential strike actions, or an agreement with terms that significantly increase labor costs or reduce operational flexibility. | Cleveland-Cliffs press releases, SEC filings (e.g., 8-K if material), USW official statements, major labor news outlets. | USW website, local news outlets in regions with significant Cliffs operations (e.g., Ohio, Pennsylvania, Indiana). | Bloomberg Terminal: Labor relations news and analysis for industrial companies. |
| Automotive OEM Demand and Aluminum-to-Steel Substitution Volume | Automotive is a high-value segment. Increased bookings and tangible volume gains from aluminum-to-steel substitution signal sustained demand, improved product mix, and market share gains, supporting Cliffs' long-term growth thesis. | Management commentary on automotive shipment volumes in Q2 and Q3, specific mentions of new OEM programs or increased steel content due to aluminum substitution, and utilization rates of lines like the New Carlile electrogalvanizing line. | Bullish: Automotive shipments continue to increase sequentially in Q2 and Q3, exceeding Q1's 'highest level in almost 2 years.' Specific examples or quantifiable impacts of aluminum-to-steel substitution are provided. Bearish: Automotive shipment growth slows or plateaus, or management's commentary suggests a deceleration in the aluminum-to-steel substitution trend. | Cleveland-Cliffs Q2 and Q3 2026 Earnings Releases and Conference Calls. Automotive industry production reports (e.g., WardsAuto, S&P Global Mobility). | Auto industry news sites (e.g., Automotive News), OEM press releases regarding production plans or material changes. | S&P Global Mobility: North American light vehicle production forecasts; IHS Markit: Automotive material usage trends. |
| Unit Cash Cost Performance (Q2 and Q3 Cadence) | Cost control and efficiency are critical for margin expansion. Meeting the guided cost cadence, especially the significant Q3 reduction, will demonstrate operational discipline and directly improve profitability. | Q2 2026 unit cash costs (expected to tick up ~$15/ton from Q1), and Q3 2026 unit cash costs (expected to fall meaningfully from Q2 levels). Also, trends in natural gas, electricity, and diesel prices. | Bullish: Q2 unit costs are in line with or below the ~$15/ton increase, and Q3 unit costs show a substantial decrease as guided, driven by improved utilization and lower energy/outage costs. Bearish: Q2 unit costs exceed the ~$15/ton increase, or the expected 'meaningful' drop in Q3 costs does not materialize as strongly as anticipated. | Cleveland-Cliffs Q2 and Q3 2026 Earnings Releases and Conference Calls. Energy market data (e.g., EIA for natural gas, regional electricity prices). | EIA (Energy Information Administration): Natural gas and electricity price data; AAA Gas Prices: Diesel price trends. | Bloomberg Terminal: Commodity prices (natural gas, diesel); Wood Mackenzie: North American energy market analysis. |
Key Reported Metrics
| Metric | Why It Matters | Last Period |
|---|---|---|
| Adjusted EBITDA | Directly reflects operational profitability and cash generation potential, crucial for investor confidence and debt reduction, especially as management expects significant sequential improvement in Q2 and Q3. | 153.07% |
| Average Selling Price per Net Ton | A primary driver of revenue and margins, reflecting market demand, trade enforcement effectiveness, and the company's pricing power, with further increases expected in the next quarter. | 6.94% |
| Total Shipments (Net Tons) | Indicates demand strength and operational utilization, with higher volumes leading to a disproportionate impact on margins due to the fixed cost nature of the business. | 0% |
Key QuestionsCan Cleveland-Cliffs deliver on its aggressive Q2 and Q3 financial guidance, specifically achieving the projected sequential improvements in EBITDA, shipments,
Can Cleveland-Cliffs deliver on its aggressive Q2 and Q3 financial guidance, specifically achieving the projected sequential improvements in EBITDA, shipments, and average selling prices, thereby validating the company's optimistic outlook and the strength of the domestic steel market?
- Question 2
To what extent will the accelerating trend of aluminum-to-steel substitution and robust automotive OEM demand translate into higher-than-expected steel shipment volumes and a more favorable product mix for Cleveland-Cliffs in the next quarter, confirming a key long-term growth driver?
- Question 3
Can Cleveland-Cliffs effectively manage its unit cash costs in Q2 and achieve the projected meaningful reduction in Q3, while also navigating potential impacts from the Canadian market's pricing discount and the upcoming United Steelworkers labor agreement renegotiation, mitigating key downside risks to profitability?
Earnings Transcript Summary
· 2026Q1 Earnings Call
| 3 Things Management Is Most Focused On | Call Takeaway & Tone | Prior Quarter'S Y/Y Growth By Segment | 3 Things Analysts Most Pressed On (And Mgmt Responses) | Revenue Segments |
|---|---|---|---|---|
| 1. **Leveraging strong market conditions and trade enforcement**: Management repeatedly highlighted the full order book, tight production schedules, extended lead times, and the effectiveness of Section 232 and the 'melted and poured' mandate in limiting imports and strengthening the domestic steel market. They also emphasized the 'Fortress North America' concept and efforts to address Canadian oversupply. 2. **Driving operational efficiency and cost performance**: This includes optimizing production schedules, idling inefficient lines (smaller plate mill at Burns Harbor, Gary plate finishing line), and investing in modernization projects like the Butler Works electrical steel expansion and the Middletown Works blast furnace configuration. They also mentioned integrating AI into production planning and order entry processes to improve decision-making. 3. **Capitalizing on the shift from aluminum to steel**: Management noted significant momentum in substituting aluminum with steel, particularly in the automotive sector, but also in building products, appliances, and truck trailers. They highlighted that automotive OEMs are prioritizing supply certainty, total cost, and safety, which favors Cliffs' steel. | The overall takeaway from the call is that Cleveland-Cliffs is highly optimistic about a sustained improvement throughout 2026, despite a challenging Q1 impacted by one-time energy costs. The tone was confident and positive, with management emphasizing strong market fundamentals driven by effective trade enforcement, robust automotive demand, and a growing trend of aluminum-to-steel substitution. They highlighted operational efficiencies, strategic investments, and expected strong cash flow generation in Q2 and Q3. Management also conveyed a less urgent stance on the POSCO deal due to improved market conditions. | For Q4 2025, Cleveland-Cliffs' consolidated revenues were $4.3 billion, consistent with the prior-year fourth quarter, representing 0% year-over-year growth. Steelmaking revenues for Q4 2025 were approximately $4.15 billion, down around 0.3% year-over-year. Specific segment-level year-over-year growth for the revenue mix categories (e.g., fixed price, spot price) was not detailed in the Q4 2025 earnings reports. | 1. **Q2 price expectations and the impact of the ended slab contract**: Carlos De Alba asked about Q2 price changes and the impact of the finished Metal slab contract. Management (Celso Goncalves) responded that Q2 selling prices are expected to be up about $60 a ton from Q1 to Q2, with automotive shipments increasing. Lourenco Goncalves clarified that 175,000 tons of slabs were shipped in Q1 as a tail end, and the contract is now over, with ArcelorMittal sourcing from elsewhere. 2. **POSCO negotiations and asset sales (e.g., HBI)**: Nick Giles and Albert Realini inquired about the status of POSCO negotiations and the potential for asset sales like the HBI plant if the deal doesn't materialize. Lourenco Goncalves explained that the external environment (South Korea's situation, stronger U.S. steel market, increased auto OEM orders) has changed, making Cliffs 'a lot less in a hurry' for the POSCO deal. He also stated that the HBI sale is not being considered anymore, as HBI is needed to increase production and generate cash flow from operations, especially with higher shipment targets. 3. **Unit cost guidance for Q2 and Q3**: Nicklaus Cash and Lawson Winder pressed on the expected $15 per ton increase in Q2 costs and the confidence in a meaningful drop-off in Q3. Celso Goncalves attributed the Q2 increase to carryover from Q1 high energy costs, Q2 outages, a richer product mix (more automotive), and war-related costs (diesel, freight). He explained that Q3 costs are expected to decrease significantly due to improved utilization, fewer outages, lower energy costs, continued asset optimization, and reduced repair and maintenance. | Specific year-over-year growth percentages for individual revenue segments (Fixed full year price, Linked to month-lag indices, Linked to quarter-lag indices, U.S. spot price, Stelco (Canada) spot price) were not provided in the transcript. However, management reported that average selling prices increased by $68 per ton from a year ago, and adjusted EBITDA increased by $274 million year-over-year, primarily due to increased pricing. Canadian selling price is at a 40% discount to U.S. pricing. |
Transcript Tidbits
| About Expanding Eligible Market | About Competition | About The Broader Industry | Where Things Are Headed | Updates On Theme | Broader Themes Emerging | Bullish-Leaning Quotes (Short) | Bearish-Leaning Quotes (Short) | Hiring |
|---|---|---|---|---|---|---|---|---|
| Automotive OEMs are booking more and more steel from Cliffs. There is significant momentum in substituting aluminum with steel, not only in automotive but also in building products, appliances, and truck trailer sectors. Cliffs has demonstrated to clients the potential benefits and market share gains from this shift, even bringing back an electrogalvanizing line at New Carlile. | Steel imports into the United States are at their lowest levels since 2009, indicating Section 232, the melted and poured mandate, and enforcement are working. However, the Canadian market remains oversupplied with foreign steel, leading to a 40% discount in Canadian selling prices compared to the U.S. The aluminum industry has been hit by power shortages, curtailments, and geopolitical disruption, making domestic steel more attractive. The company is no longer supplying slabs to ArcelorMittal, who must now source from other providers. | The domestic steel industry is benefiting from strong trade enforcement and government support, with union jobs protected and supply chains more resilient. Global uncertainty, including war activity in Iran, has disrupted freight lanes, driven up energy prices, and destabilized metal supply chains, making imported steel structurally more expensive. Automotive OEMs are shifting focus from cost to supply certainty, total cost, and safety, leading to a correction in the market where less prepared competitors are being weeded out. | The company expects a sustained improvement progression throughout 2026, with pricing strength increasingly showing up in results quarter by quarter. Q2 is projected to be the best quarter in nearly two years, with Q3 showing even greater earnings power due to maximum operating leverage. The Butler Works electrical steel expansion is on schedule for 2028 completion, and the Middletown Works project will proceed with a modern, energy-efficient blast furnace configuration. The company plans a full announcement on its AI initiative soon and will renegotiate its labor agreement with United Steelworkers in the coming months. $425 million in idle property sales are on target for 2026, with $50 million expected in Q2, $100 million in Q3, and the remainder in Q4. | The | AI adoption in industrial operations is a broader theme, with Cliffs partnering with a leading AI provider to embed machine learning into production planning and order entry processes. Geopolitical instability, specifically war activity in Iran, is disrupting global freight lanes, driving up energy prices, and destabilizing metal supply chains across industries. There is an emerging shift in automotive OEM priorities towards supply certainty, total cost, and safety over just cost. | Our order book is full and the automotive OEMs are booking more and more steel from Cliffs. This market strength is driven by what is happening on the trade front, steel imports into the United States are at their lowest levels, since 2009. Q2 should be our best quarter in nearly 2 years. Q3 will give us maximum operating leverage on volumes and pricing and is where you should expect to see the earnings power of this business become much more apparent. | While Q1 results could be better and they would be better. if not for a couple of one-timers, we can see the clear signs of a positive trend for me. Among these one-timers, the impact of the spiking on energy cost was the most relevant to Q1 results. The 1 piece still missing is Canada... the Canadian market is still oversupplied with steel from countries that are no longer able to dump their excess capacity into the United States. In today's market, the Canadian selling price is at a 40% discount to U.S. pricing. The currency disruption in the Middle East and its impact in the country of South Korea have not helped accelerates the conclusion of our ongoing discussions [with POSCO]. | The company is idling a smaller plate mill at Burns Harbor and the Gary plate finishing line, but there will be no loss in overall steel production or layoffs, as roles will be backfilled in areas with attrition. The renegotiation of the labor agreement with United Steelworkers is an important upcoming milestone. |
Notes
| Date | Comment | Comment Type | Comment Sentiment | Link | IS CHANGE | Price Reaction |
|---|---|---|---|---|---|---|
| 2026-04-20 | Cleveland-Cliffs reported Q1 2026 results, highlighting strong demand, effective trade enforcement, and an expected sustained improvement through Q2 and Q3, despite a one-time $80 million energy cost impact. Management also noted momentum in aluminum-to-steel substitution and a less urgent stance on the delayed POSCO deal. However, the stock significantly underperformed post-earnings, suggesting market skepticism regarding near-term cost pressures or the delayed deal, contradicting the company's optimistic outlook. | Earnings Transcript | Neutral | False | -4.43% (vs SPY: -4.78%) |
Upcoming Events
| Catalyst ID | Estimated Timing | Estimated Date Start | Estimated Date End | Catalyst | Why It Matters | Ticker Or Theme Specific | Transcript Date | Source Type |
|---|---|---|---|---|---|---|---|---|
| CLF_0f0250a2 | Canada will ultimately get to the right place and enhance its own national security defenses against the negative impact of foreign steel | 2026-04-24 | 2027-12-31 | Canadian government implements stronger trade defenses against foreign steel dumping, aligning with the 'Fortress North America' concept. | This action would reduce oversupply in the Canadian steel market, improving pricing for Cleveland-Cliffs' Canadian subsidiary, Stelco, and enhancing its profitability, as Canadian selling prices are currently at a significant discount to U.S. pricing. | Ticker | 2026-04-20 | earnings_transcript |
| CLF_38e1242e | within this time frame or slight later (referring to Q2 2026) | 2026-04-01 | 2026-09-30 | Completion of a mutually satisfactory transaction with POSCO, in accordance with the memorandum of understanding signed last year. | This strategic transaction could be accretive to shareholders and potentially involve asset sales or partnerships, impacting Cleveland-Cliffs' balance sheet, cash flow, and strategic direction, though management is 'a lot less in a hurry now' due to improved market conditions. | Ticker | 2026-04-20 | earnings_transcript |
| CLF_8727ba95 | final stages of completing that work | 2026-04-24 | 2026-06-30 | Final approval of the updated scope for the Middletown Works project. | This approval will allow the Middletown Works project to proceed, leading to a modern, energy-efficient blast furnace configuration that strengthens domestic steelmaking and improves efficiency. | Ticker | 2026-04-20 | earnings_transcript |
| CLF_ce40081a | in the next few weeks | 2026-04-24 | 2026-05-24 | Full announcement on Cleveland-Cliffs' AI initiative, including the name of their partner. | This initiative aims to embed AI into production planning and order entry processes, moving towards AI-assisted decision-making, which is expected to optimize sequencing, anticipate constraints, and improve overall efficiency and cost performance. | Ticker | 2026-04-20 | earnings_transcript |
| CLF_8e343c8a | in the coming months | 2026-05-01 | 2026-10-31 | Renegotiation of the labor agreement with United Steelworkers. | The outcome will significantly impact labor costs, operational flexibility, and long-term sustainability. A successful agreement supports competitiveness and investment, while a contentious negotiation could lead to disruptions or higher costs. | Ticker | 2026-04-20 | earnings_transcript |
| CLF_d735abce | $50 million in Q2 and $100 million in Q3, with the remainder in Q4 | 2026-04-01 | 2026-12-31 | Completion of idle property sales, with expected cash receipts of $50 million in Q2, $100 million in Q3, and the remainder (approximately $205 million) in Q4. | These sales will generate significant cash flow, strengthen the balance sheet, and help achieve longer-term leverage objectives, providing financial flexibility for the company. | Ticker | 2026-04-20 | earnings_transcript |