Cleveland-Cliffs Q4 2024: Contradictions in Automotive Demand, Stelco Synergies, and Financial Strategy

These are the key contradictions discussed in Cleveland-Cliffs' latest 2024Q4 earnings call, specifically including: Automotive Market Demand and Pricing, Stelco Synergies, Automotive Market Conditions, Financial Health and Debt Management, and Cost Reduction Strategies:



Resurgence in Steel Demand and Order Book:
- Cleveland-Cliffs experienced a substantial increase in its order book over the past months, with steel prices rising and lead times extending from 3 weeks to 7 weeks.
- This resurgence is attributed to improved market conditions, including favorable automotive and industrial demand, and the positive impact of recent tariffs on imported steel.

Challenges in 2024 and Idle Production:
- The company faced weak demand in the second half of 2024, leading to the idling of its C6 blast furnace at Cleveland Works.
- This was primarily due to unnatural factors such as high interest rates and unfair trade competition from foreign producers.

Positive Impact of Tariffs:
- Cleveland-Cliffs appreciates the recently announced 25% tariffs on steel imports from all countries, which are critical in addressing issues like dumping and overcapacity in the steel industry.
- These tariffs will penalize foreign competitors and strengthen domestic producers, benefiting Cleveland-Cliffs and its newly acquired Stelco.

Improved Financial Performance and Synergies:
- Despite financial difficulties in 2024, Cleveland-Cliffs continues to manage costs and optimize operations, resulting in a reduction of unit steel costs by $30 per ton year-over-year.
- The acquisition of Stelco is expected to further reduce costs by $40 per ton in 2025, with synergies in order flow and cost structure optimization.

Safety Record and Liquidity Position:
- The company reported a full-year 2024 reportable injury rate of 0.9, reflecting a strong safety record due to a positive relationship with the workforce.
- Cleveland-Cliffs maintains a healthy liquidity position with $3 billion in liquidity and secured debt capacity following a recent capital raise.