Cleveland-Cliffs' 10-Year Outperformance and Future Growth Potential in a Resilient Steel Market

The steel industry, long characterized by its cyclical nature, has seen few companies navigate its volatility as persistently as Cleveland-Cliffs (CLF). Over the past decade, the company's stock has delivered a compound annual growth rate (CAGR) of 23.65% with dividends reinvested, significantly outperforming the S&P 500's average returns and cementing its position as a standout performer in a sector prone to boom-and-bust cycles according to analysis. Yet, as the company faces renewed challenges in 2025, investors must weigh its historical resilience against current headwinds and strategic ambitions.

A Decade of Compounding Returns

Cleveland-Cliffs' 10-year performance is a testament to its ability to capitalize on industry tailwinds. From December 2015 to December 2025, the stock grew at a CAGR of 23.65%, transforming a $10,000 investment into approximately $83,646-a return that dwarfs the S&P 500's roughly 14% annualized gain over the same period according to data. This outperformance was driven by a combination of strategic acquisitions, cost discipline, and favorable macroeconomic conditions, including the U.S. steel industry's shift toward onshoring and trade protectionism.

However, the past year has been a stark contrast. In 2025, CLF's stock fell 57.5% year-to-date, underperforming the S&P 500's 10.4% gain. This decline reflects broader challenges in the steel sector, including weak pricing in key markets and rising interest rates that have dampened construction and manufacturing demand according to reports. Yet, even amid this volatility, the company's 3-year average return of 17.93% remains competitive with the S&P 500's 17.48%, underscoring its long-term appeal.

Strategic Positioning in a Cyclical Industry

Cleveland-Cliffs' success has hinged on its ability to adapt to the steel industry's cyclical rhythms. As a vertically integrated producer, the company controls its supply chain, reducing exposure to raw material price swings-a critical advantage in an era of global supply chain disruptions. Its recent acquisition of Stelco in 2025, for instance, expanded its steelmaking capabilities and diversified its geographic footprint, positioning it to capture growth in North American automotive and construction markets.

The company has also benefited from U.S. trade policies that favor domestic steel producers. Following the Trump administration's imposition of tariffs on imported steel, demand for U.S.-made products surged, particularly in the automotive sector, where Cleveland-Cliffs has secured long-term supply agreements with major OEMs. These contracts, coupled with the company's nine galvanizing plants dedicated to automotive-grade steels, have insulated it from some of the sector's cyclical downturns.

Navigating Current Challenges

Despite these strengths, Cleveland-Cliffs faces near-term hurdles. For the third quarter of 2025, the company reported an adjusted net loss of $223 million, with revenues declining to $4.7 billion from $4.9 billion in the prior quarter. The average net selling price per ton of steel products fell to $1,032 from $1,045 a year earlier, reflecting weaker pricing power amid oversupply and sluggish demand.

The company's reliance on blast furnace technology-costlier and less flexible than the electric-arc furnaces used by peers like Nucor-also exposes it to margin compression during downturns. However, Cleveland-Cliffs has taken steps to mitigate these risks, including $40 per net ton in cost reductions in 2025 and a $3.1 billion liquidity buffer as of September 30, 2025. These measures, combined with its low price-to-sales ratio of 0.44x, suggest the stock may be undervalued relative to its peers.

Future Growth: Critical Materials and Strategic Alliances

Looking ahead, Cleveland-Cliffs is pivoting toward new growth avenues. The company is exploring rare-earth mineralization at sites in Michigan and Minnesota, aligning with the U.S. government's push for critical material independence. Additionally, a memorandum of understanding with a global steel producer hints at potential partnerships that could enhance its technological capabilities and market reach.

These initiatives are critical in a sector where demand is expected to rebound as interest rates stabilize and infrastructure spending accelerates. Cleveland-Cliffs' strategic focus on onshoring, supply chain resilience, and critical materials positions it to benefit from these trends, even as it navigates the cyclical nature of steelmaking.

Conclusion: Balancing Opportunity and Risk

Cleveland-Cliffs' 10-year outperformance demonstrates its ability to thrive in a volatile industry, but investors must remain cautious. The company's recent 25% stock price drop in late 2025 reflects concerns about execution risks and macroeconomic headwinds. Yet, its long-term strategic moves-ranging from vertical integration to critical material exploration-suggest a commitment to securing its position in a resilient steel market.

For investors with a multi-year horizon, Cleveland-Cliffs offers a compelling case: a company that has historically outperformed through compounding returns, now seeking to leverage structural shifts in the U.S. economy. However, success will depend on its ability to execute cost reductions, stabilize pricing, and capitalize on emerging opportunities in critical materials.