Cleveland-Cliffs Inc.

What they do

Cliffs is a vertically integrated steel producer that mines iron ore, produces pellets and direct reduced iron, processes ferrous scrap, and manufactures flat-rolled steel through primary steelmaking, downstream finishing, stamping, tooling, and tubing. The company operates primarily in the United States and Canada, and is a leading supplier of automotive-grade steel in the U.S., as well as a leading producer of electrical steels. Its product range includes advanced high-strength steel, hot-dipped galvanized, aluminized, galvalume, electrogalvanized, galvanneal, hot-rolled coil, cold-rolled coil, plate, grain-oriented electrical steel, non-oriented electrical steel, stainless steels, tool and die, stamped components, and slabs.

Revenue drivers

• Steelmaking segment — Generated $5.05 billion in external revenues in Q2 2026, with sales volumes of 4.0 million net tons and an average net selling price of $1,124 per net ton; revenues are diversified across distributors and converters (33%), automotive (29%), infrastructure and manufacturing (28%), and steel producers (10%).
• Automotive steel — Cliffs is a leading supplier of automotive-grade steel in the U.S., with direct automotive sales of $1.5 billion in Q2 2026 (29% of steelmaking revenues); the company signed multi-year fixed price contracts with major automotive customers in 2025.
• Electrical steels — Cliffs is a leading producer of electrical steels in the U.S., including grain-oriented and non-oriented electrical steels, which are critical for electrical grid modernization and transformer production; this product line is part of the stainless and electrical category that represented 4% of Q2 2026 steel product sales volumes.
• Other markets — Sales to distributors and converters ($1.6 billion, 33% of steelmaking revenues in Q2 2026), infrastructure and manufacturing ($1.4 billion, 28%), and steel producers ($526 million, 10%) provide additional revenue streams beyond automotive.

Recent performance

For Q2 2026, Cleveland-Cliffs reported revenues of $5.2 billion (up $300 million from Q1 2026), an operating cash flow of $230 million, and a GAAP net loss of $134 million, or $0.25 per diluted share. Adjusted EBITDA was $286 million, a $191 million improvement from Q1 2026. Steelmaking segment revenues were $5.05 billion with 4.0 million net tons sold at an average price of $1,124 per net ton. For the first half of 2026, the company reported a net loss of $363 million and adjusted EBITDA of $381 million.

Strategy

Cliffs aims to strengthen its position as a North American leader in steel by executing multi-year fixed price contracts with automotive customers, optimizing its operational footprint, and reducing unit costs. The company also signed a Memorandum of Understanding with POSCO to potentially form a strategic partnership. Cliffs expects to reduce debt and achieve a leverage target of under 2.5x debt to EBITDA by mid-2027, supported by positive free cash flow and improved earnings. It continues to invest in maintenance capital and quality upgrades, such as the new bright anneal line at its Coshocton facility.

Risks

• Steel, scrap, and iron ore price volatility — Cliffs' profitability is directly and indirectly affected by historically volatile market prices for steel, scrap metal, and iron ore, which are influenced by factors beyond its control such as changes in production capacity.
• Automotive market dependence — A significant portion of Cliffs' revenues comes from automotive-grade steel, making it vulnerable to declines in North American light vehicle production, which was 15.3 million units in 2025, below the pre-COVID level of approximately 17 million.
• Canadian operations weakness — Cliffs' Canadian operations, including Stelco, were negatively impacted in 2025 by global overcapacity and steel dumping in Canada, though tariff-rate quotas imposed by Canada may help support improvement.
• Trade policy and tariff uncertainty — While current U.S. steel tariffs support domestic pricing, changes in trade policy or tariffs could affect import levels, domestic steel demand, and Cliffs' competitive position.

Outlook

Management expects Q3 2026 adjusted EBITDA to more than double Q2 2026, and Q4 2026 EBITDA to exceed Q3, with the second half of 2026 being the strongest since 2021. The company anticipates reaching a leverage target of under 2.5x debt to EBITDA by mid-2027 and expects continued debt reduction. Cliffs also expects automotive volumes to increase in Q3, helping absorb fixed costs as finishing lines operate at higher utilization rates, and sees meaningful improvement in the Canadian market positioning Stelco to generate significant earnings.