Cleveland-Cliffs saw its strongest quarter in three years, CFO Celso Goncalves said on an earnings call Monday, driven in part by higher prices and favorable costs.
The steelmaker reported adjusted earnings before interest, taxes, depreciation and amortization of $612 million during Q3, which came in above its $575 million guidance issued three months ago. It was also more than double what Cleveland-Cliffs generated in Q2.
“The third quarter of this year showed what happens when price, volume, mix and cost all move in a favorable direction,” Goncalves said.
Q3 steel shipments reached 4.2 million net tons, up 3% from a year ago and the previous quarter. The shipment mix during the period included 46% hot-rolled, 31% coated, 15% cold-rolled, 4% plate and 4% stainless and electrical. Shipments to North American automotive customers were the highest they’ve been since Q3 2023, Goncalves said.
At the same time, market prices increased in the United States and Canada. The average net selling price reached $1,177 per ton, up $53 per ton from the previous quarter.
“Customers are more focused on securing volume than price at the moment,” Goncalves said.
He also noted that unit costs declined by $17 per net ton in Q3, which exceeded the company’s expectations and contributed largely to its posititive earnings. Goncalves said the “secret sauce” to lowering costs has been running the mills at full capacity to meet the company’s order books.
Cleveland-Cliffs is making progress on five operational projects, including two expansions supported by a total of $575 million in U.S. Department of Energy grants. It also moved to postpone the relining of a blast furnace in Burns Harbor from mid-2027 to April 2028.
“By safely pushing out the reline, we can capitalize on a highly favorable commercial environment, preserve valuable production capacity during a period of strong demand and pricing, and enhance cash generation while maintaining operational reliability,” Goncalves said.
Markets, trade and contracts
Cleveland-Cliffs’ positive results coincided with one of the best pricing environments in three years, Lourenco Goncalves, CEO and father of Celso, said on the earnings call.
“One thing that has become very clear is that a healthy domestic steel industry happens when trade laws are enforced, and when foreign producers are no longer allowed to dump steel into our markets without consequences,” said Goncalves, a strong advocate for the Trump administration’s tariff strategy. The administration shifted its Section 232 tariffs in April, setting a 50% rate on on the full custom value of steel, aluminum and copper, as well as a 25% rate on derivative goods.
U.S. steel imports have become less attractive to buyers due to higher global steel and freight costs, as well as logistics disruptions and tariffs, according to Cleveland-Cliffs’ Q3 earnings presentation. As a result, demand for domestically produced steel has continued to climb to support data centers, energy and other projects.
Since its last earnings call in July, Cleveland-Cliffs has renewed several annual price-fixed contracts for next year. These agreements, which reset Jan. 1, 2027, cover every segment of light, flat-rolled steel consumption outside of automotive, Goncalves said.
“Nearly all of these customers want more steel,” he said, adding that the renewals should increase the company’s EBITDA by more than $1 billion next year.
Outlook
Cleveland-Cliffs estimated adjusted EBITDA of $715 million during Q4, due to increased prices supported by favorable trade policies.
Celso Goncalves said shipment levels should remain strong next quarter despite slower holiday activity and cold weather, and prices continue to climb.
U.S. index prices have grown at an average rate of $40 per ton each month, and “we do not see any signals in our order book pointing to a slowdown of this pace,” he said. The company also plans to schedule maintenance outages next quarter to ensure operations continue to run safely and securely.
Cleveland-Cliffs estimated EBITDA to exceed $4 billion next year, citing contract changes and price projections. Given the favorable market backdrop, Goncalves said paying down debts is and will continue to be the company’s top priority.
