Cleveland-Cliffs Sees Much Stronger Second Half, More Growth Into ’27
Key Highlights
- Cleveland-Cliffs expects stronger H2 2026 results from higher steel prices, lower costs and rising automotive demand driving production gains.
- Extensive maintenance reduced Q2 output, but improved operations and full finishing lines position the company for higher shipments.
- Fixed-price contract resets and Stelco performance gains could lift 2027 adjusted EBITDA to $3.3B, signaling long-term growth.
After the better part of two years of cutting costs and focusing on operations while waiting for demand from auto makers to climb, the leaders of Cleveland-Cliffs Inc. say the stars have aligned for a big jump in profits in the rest of 2026 and next year.
After a second quarter in which the steel manufacturer reported a $134 million net loss on revenues of more than $5.2 billion that were held down in part by extensive maintenance work, Chairman, President and CEO Lourenco Goncalves and his team said July 23 they expect production to increase roughly 300,000 net tons from Q2’s 4.0 million tons thanks to strong demand, with automotive customers expected to account for about half of that rise.
That extra volume, combined with a price per net ton that’s expected to be $55 higher than in the spring and slightly lower production costs, should lead to a big jump in Cliffs’ adjusted EBITDA, which was $286M in Q2. Goncalves said the target for the third quarter is $575 million, a number that should grow further in the last three months of the year.
For 2027, Goncalves and his team say, adjusted EBITDA could grow to $3.3 billion for all of 2027 as some fixed-price contracts reset to current prices and the company’s Stelco division in Canada improves its performance.
Goncalves last fall said he was growing increasingly upbeat about the prospects for Cleveland-Cliffs – and specifically its automotive business – as President Trump’s tariffs worked their way through the economy. The measures, he has consistently said, will both protect the U.S. steel industry and pad the margins of producers. On the question of demand from car companies, his outlook was supported last week by Mary Barra, chair and CEO of General Motors Corp., who said her team is “just not seeing” any weakness on the part of car buyers.
Also on the July 23 conference call, Cleveland-Cliffs President and CFO Celso Goncalves said Cleveland-Cliffs isn’t as close on selling some assets as he and Lourenco Goncalves had previously signaled. The company already has received about $100 million of roughly $425 million related to the sale of some properties, including the Florida arm of its Ferrous Processing and Trading division. But other possible deals executives had floated, including for a direct-reduction iron in Toledo, haven’t moved forward – mainly because prospective buyers have been a little too opportunistic but also because the bigger picture looks more promising.
“The offers that we have received related to these processes have fallen short of our value threshold,” Celso Goncalves said.
Speaking specifically to a prospective tie-up of some sort with South Korea’s POSCO, which already has been delayed from its original timeline, Celso Goncalves said the parties are still talking but haven’t made much progress.
“Valuation and structure are important and we’re not desperate to do anything unless these two factors are met by POSCO and acceptable to us,” he added. “The United States is the best market in the world and it’s not cheap to play in our sandbox.”
Shares of Cleveland-Cliffs (Ticker: CLF) rallied more than 15% to $10.96 on the July 23 earnings report and conference call commentary. In midday trading July 27, they were changing hands around $11.75. Year to date, however, they are still down more than 10%, a move that has left the company’s market capitalization at about $6.7 billion.
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.