Cleveland-Cliffs Slides After CEO Pushes POSCO Tie-Up Timeline

Cleveland-Cliffs Inc. Chairman, President and CEO Lourenco Goncalves delivered a clear message Feb. 9 about the state of several important topics for the steel manufacturer: “Not yet.”

Goncalves and his team haven’t yet put the finishing touches on a strategic partnership with POSCO, Korea’s largest steelmaker, that is likely to have the latter taking a sizable stake in Cliffs. When the companies announced a memorandum of understanding in late October, Goncalves had signaled that the deal would be done this quarter. But on a conference call with analysts after Cliffs reported its fourth-quarter results—an adjusted net loss of $237 million that grew the company’s full-year losses to more than $1.2 billion—Goncalves said POSCO teams are still studying Cliffs’ assets and books.

“The duration of these negotiations reflects the seriousness and potential scale of the opportunity. We are targeting signing a definitive agreement in the first half of 2026,” Goncalves said. “Engagement between the teams is active and ongoing. Our MOU is nonbinding, and we will only move forward on ratifying our partnership if the collaboration is accretive to Cliffs shareholders.”

Another “Not yet” item for Cliffs is some help from its most important end market, the automotive sector. Goncalves and his team last year signed several long-term supply agreements at fixed prices that will soak up spare capacity at the company’s plants. But, he noted on the conference call, “the transition to Cliffs steel from the previous suppliers is not instantaneous” and will only start to show itself in stages as 2026 progresses.

On top of that, car makers in the United States and Canada are only just beginning to rebuild production. Researchers at PwC say it will take until 2030 for North American vehicle production to return to 2019 levels, and the Alliance for Automotive Innovation is forecasting North American production will slip nearly 2% to 15.3 million this year after shrinking about 3% in 2025.

“We are a well-known and well-recognized supplier of automotive steel on the international scale. And we knew that all along,” Goncalves said. “Now we have the agreement of POSCO on that […] We know how to do stuff. We just don’t have the orders.”

Investors responded to Goncalves’ communications with a clear message of their own: The company you run is now worth a sixth less than yesterday. In the last half-hour of trading Feb. 9, shares of Cleveland-Cliffs (Ticker: CLF) were down more than 15% to about $12.50, a slide that pushed the company’s market capitalization below $7 billion. (The shares are still up more than 25% over the past six months, in significant part because of the prospect of a POSCO tie-up.)

On the conference call, Goncalves and CFO Celso Goncalves did also point to some clear tailwinds when it comes to Cliffs’ 2026 financials:

The end of a contract to supply slab to ArcelorMittal—a partnership Goncalves said was turned into “a disaster” by 2025 pricing trends—will add at least $500 million to EBITDA as Cliffs’ redirects capacity to higher-margin products.

The recent increase in the price of hot rolled coil provides a natural lift to earnings. Celso Goncalves said realized prices this quarter should be about 6% higher than in Q4.

The company’s Stelco subsidiary in Canada is now contributing to profitability after a rough 2025, when the company changed its business model to focus on selling only in its home market just as imports rose. The Canadian government has recently taken some steps to limits imports, which has improved conditions for Stelco.