Cleveland-Cliffs (CLF) Rallies 1.34% to 2025 High on Supply Agreements, Tariff Expansion

Shares of Cleveland-Cliffs (CLF) surged to a 2025 high on Monday, with the stock climbing 4.35% intraday before closing up 1.34% at $12.81. The rally marked a significant outperformance against broader market indices, as CLF’s year-to-date gains now exceed 14.7% despite a challenging industry backdrop.

Investor optimism appears driven by strategic developments, including multi-year supply agreements with U.S. automakers like General Motors. These contracts, secured in August, lock in pricing terms for three years, offering stability amid volatile steel markets and aligning with the automotive sector’s shift toward electrification. The agreements have insulated CLF from near-term price fluctuations while reinforcing its position as a key supplier in a critical industry segment.

However, near-term headwinds persist. Analysts project CLF will report a quarterly loss of $0.46 per share on October 20, a 39.4% decline from the prior year. The Zacks Consensus estimates a full-year loss of $2.20 per share, reflecting sector-wide challenges such as slowing demand and competitive pressures. The Zacks Rank for CLF has been downgraded to #4 (Sell) due to a 6.73% downward revision in earnings estimates over the past month, signaling reduced confidence in the company’s ability to offset these headwinds.

Regulatory tailwinds have also shaped the stock’s trajectory. The U.S. government’s expansion of Section 232 tariffs to cover electrical and stainless steel derivatives has been welcomed by CLF, as the policy aims to curb cheaper imports and stabilize domestic prices. While the long-term impact remains uncertain, the move could mitigate margin pressures for U.S.-based producers like CLF, which operates large-scale facilities in the Midwest.

Financial restructuring efforts further highlight CLF’s strategic focus. The company has prioritized debt reduction, a move underscored by Jim Cramer in July, to strengthen its balance sheet in a cyclical industry. However, a recent $275 million senior notes offering suggests CLF is also raising capital to fund operations, balancing liquidity needs with long-term stability. The effectiveness of these measures will be critical in restoring investor confidence, particularly as the steel sector ranks poorly among Zacks industries, reflecting broader challenges in profitability and demand.

CLF’s outperformance in a risk-off market environment underscores its defensive appeal within the Basic Materials sector. As the largest steel producer in North America, its vertically integrated operations and diversified portfolio of iron ore, steelmaking, and recycling assets position it to weather industry consolidation. Yet, the stock’s trajectory will hinge on its ability to deliver on earnings expectations, navigate regulatory shifts, and leverage strategic partnerships to sustain growth in a competitive landscape.