Cleveland-Cliffs Executives See ‘Significant Rebound’ in Steel Demand
Leaders of steel manufacturer Cleveland-Cliffs Inc. said Oct. 20 they are seeing “a significant rebound in domestic steel demand” now that tariffs have been in place for several months. And they say the automotive industry is in the lead and likely to bring with the construction and broader manufacturing sectors.
Speaking after they reported Cleveland-Cliffs’ third-quarter results, Chairman, President and CEO Lourenco Goncalves and CFO Celso Goncalves said the tariffs and other trade measures put in place this year by the Trump administration have started to change user behavior. That, Lourenco Goncalves said on a conference call with analysts, is showing up most conspicuously among automotive original equipment manufacturers, a hatful of whom have recently signed multi-year agreements for Cliffs steel that “will generate a lot more margin, including margin per ton.”
In addition, Celso Goncalves pointed out that other parts of the steel market also are showing signs of better demand.
“We have finally started to see a bit of restocking activity in the distributor and end-user markets, an indication that the new tariff reality for those buyers is setting in,” he said. “The signs of a real recovery are forming.”
Lourenco Goncalves also told analysts and investors that he recently signed a memorandum of understanding with a global steel maker to have the latter capitalize on Cliffs’ domestic footprint as its customers invest in U.S. facilities. Goncalves said he hopes to have a formal announcement in the next few months and didn’t answer questions about the scope or terms that the MOU contemplates.
The leaders of Cliffs also are moving forward with plans to trim the company’s holdings, an initiative they hinted at three months ago. They have signed deals—either contracts or agreements in principle—to sell eight sites for a total of $425 million. One of those is with SA Recycling for the Florida operations of Ferrous Processing and Trading, the scrap metals buyer, seller and recycler Cleveland-Cliffs acquired in late 2021. Goncalves said the plan is to sell other FPT locations, too, as well as the company’s direct-reduction iron plant in Toledo—with sale proceeds earmarked to pay down debt.
Shares of Cleveland-Cliffs (Ticker: CLF) popped on the earnings report and conference call comments and were up more than 17% to $15.65 in mid-afternoon trading. They have now more than doubled over the past six months, a surge that has grown the company’s market capitalization to about $7.7 billion.
In addition to being optimistic about commentary on Cliffs’ core business, investors cheered Goncalves’ statements about his team exploring opportunities to mine rare-earth minerals from some of its holdings in Michigan and Minnesota. On his conference call, Goncalves didn’t have much to add in terms of details, next steps in the process or a possible timeline for beginning extraction work.
About the Author
Geert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has been in business journalism since the mid-1990s and writes about public companies, markets and economic trends for Endeavor Business Media publications, focusing on IndustryWeek, FleetOwner, Oil & Gas Journal, T&D World and Healthcare Innovation. He also curates the twice-monthly Market Moves Strategy newsletter that showcases Endeavor stories on strategy, leadership and investment and contributes to other Market Moves newsletters.
With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati in 1997, initially covering retail and the courts before shifting to banking, insurance and investing. He later was managing editor and editor of the Nashville Business Journal before being named editor of the Nashville Post in early 2008. He led a team that helped grow the Post's online traffic more than fivefold before joining Endeavor in September 2021.