Cleveland-Cliffs Q3 2024 Earnings: Stelco Acquisition Boosts Resilience

Cleveland-Cliffs Inc. (NYSE: CLF) reported its third-quarter 2024 earnings on November 4, 2024, highlighting the strategic acquisition of Stelco and its positive impact on the company's resilience and cost structure. Despite a challenging quarter marked by weaker demand and pricing, Cliffs' strategic moves position it for future growth and profitability.

The acquisition of Stelco, completed on November 1, 2024, has significantly diversified Cleveland-Cliffs' product offerings and market exposure. Stelco's portfolio is distinct from Cliffs, with minimal automotive sector exposure, making Cliffs more resilient during periods of underperformance from automotive clients. Stelco's low-cost, efficient assets contribute to Cliffs' resilience, as evidenced by Stelco's industry-leading third-quarter adjusted EBITDA margin of 13%. This acquisition has expanded Cliffs' market reach, with Stelco's steel shipments of 639,000 net tons, primarily hot-rolled, further bolstering Cliffs' overall production capacity.


Cleveland-Cliffs' strategic acquisition of Stelco is expected to bring significant synergies and cost savings. Stelco's low-cost, efficient assets will contribute to Cliffs' resilience, particularly in times of underperformance from automotive clients. Stelco's industry-best third-quarter adjusted EBITDA margin of 13% is a testament to its cost advantages and strong business model. Unlike previous acquisitions, Stelco's assets are well-capitalized and contribute to Cliffs' bottom line from day one. For 2025, Cliffs has set a much lower capital budget, indicating potential cost savings and improved efficiency.


The acquisition of Stelco positions Cleveland-Cliffs to capitalize on potential steel demand rebounds in 2025 by diversifying its product portfolio and reducing exposure to the volatile automotive sector. Stelco's low-cost, efficient assets and minimal automotive exposure will make Cleveland-Cliffs more resilient during market downturns. Additionally, Stelco's industry-leading third-quarter adjusted EBITDA margin of 13% demonstrates its strong business model and cost advantages, which will benefit Cleveland-Cliffs. With Stelco's assets contributing on day one, Cleveland-Cliffs is well-positioned to reduce acquisition debt quickly with healthy free cash flow, supporting its growth strategy.

In conclusion, Cleveland-Cliffs' strategic acquisition of Stelco has significantly enhanced the company's resilience and cost structure. By diversifying its product offerings and reducing exposure to the volatile automotive sector, Cliffs is well-positioned to capitalize on potential steel demand rebounds in 2025. With Stelco's low-cost, efficient assets and strong business model, Cleveland-Cliffs is poised for future growth and profitability.