Dive Brief:
- Cleveland-Cliffs reported first quarter revenue of $4.9 billion, up $600 million from the previous quarter, driven by renewed demand for domestic, flat-rolled steel as prices increased from tariffs and geopolitical disruptions.
- President and CEO Lourenco Goncalves said on a conference call Monday that “our order book is full” and more automotive and appliance customers are switching away from aluminum to steel products.
- The Ohio-based company posted a net loss of $229 million during the quarter, an improvement from a year ago and the previous quarter, as headwinds from a one-time spike in energy costs and winter-related disruptions weighed on results.
Dive Insight:
The first quarter of 2026 marked the start of a turnaround for Cleveland-Cliffs, as U.S. steel prices strengthened amid the Trump administration’s tariffs, and disruptions in the Middle East constrained the flow of international metals. War activity in Iran is also driving up energy and transportation costs, Goncalves said, “exposing weaknesses elsewhere” while “strengthening the position of domestic steel producers.”
“It’s clear that Section 232 works. The ‘melted and poured’ mandate works and the enforcement works,” he said. “Along those lines, we are very encouraged by the recent changes in how derivative product tariffs are being enforced.”
Earlier this month, the Trump administration lowered its Section 232 tariffs for derivative products made partially with steel, aluminum or copper, as well as for certain metal-sensitive industrial and electrical grid equipment. Imports made almost entirely of those metals will continue to face a 50% rate.
“The Trump administration has given the domestic steel industry what we needed and have been asking for,” Goncalves said. “Union jobs are being protected, domestic supply chains are more resilient and mills are running at higher utilization with real predictability.”
Cleveland-Cliffs reported 4.1 million net tons of steel shipments in the first quarter, an increase of 338,000 net tons from the previous quarter. This was driven mostly by increases in direct automotive and service center shipments.
“I have never seen so much momentum in substituting aluminum with steel,” he said. The U.S. aluminum market has been challenged lately by plant fires, power shortages and curtailments.
In response, Cleveland-Cliffs has been shifting more of its equipment previously used for aluminum production to steel to meet growing domestic demand. This shift is happening in the automotive, building products, appliances and truck and trailer sectors, Goncalves said.
Steel prices have also risen substantially. EVP and CFO Celso Goncalves, who is Lourenco’s son, said average selling prices in the U.S. have increased by $68 per ton from a year ago. They are also up $55 per ton from the previous quarter. He said the effect of these prices will start to show more fully in Cleveland-Cliffs’ second and third quarter results.
Meanwhile, Canada’s selling prices are down significantly. As international producers divert their exports to the country, Celso Goncalves said spot market prices are at a 40% discount compared to the U.S. These prices remain positive for Stelco — a Canadian company Cleveland-Cliffs acquired in November 2024 — but are lower than usual, he said.
One-time and seasonal costs also weighed on Cleveland-Cliffs. Celso Goncalves said the company locked its natural gas purchases for the month of February when the market was its highest in the past three years. This was partially offset by price risk management actions.
Additionally, he said the company saw energy prices spike during the cold Midwest winter months. This resulted in an $80 million negative impact on first quarter earnings.
“What’s fundamentally different today is that trade enforcement is working,” Lourenco Goncalves said. “Our customers are engaged and our order book is full. This company has spent the last couple of years fixing what needed to be fixed. That work is largely behind us. The footprint has been rightsized, and we finally have the platform to perform and deliver.”
Looking ahead, Cleveland-Cliffs maintained its full-year outlook, including steel shipment volume estimates between 16.5 million to 17 million net tons. No annual revenue or income estimates were provided.
Lourenco Goncalves said the company is continuing its talks with Posco in South Korea about a potential trade agreement. They signed a memorandum of understanding in September that would allow Posco’s products to “meet U.S. trade and origin requirements” with help from Cleveland-Cliffs. However, a definitive agreement has not been reached yet.
“We still believe a deal can be completed” during the second quarter or “a bit later,” he said, adding later in the call that trade and policy dynamics have shifted to where “we are no longer in a hurry” in regards to the agreement.
Cleveland-Cliffs has also started partnering with an artificial intelligence firm to help embed automation technologies into its production planning and order entry processes. Lourenco Goncalves said the company will use the technology to anticipate potential constraints and enhance real-time decision-making. The company plans to release more details on the partnership in the coming weeks.
Cleveland-Cliffs is also preparing to renegotiate a labor agreement with the United Steelworkers union in the coming months.
