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Researched by Industrial Info Resources (Sugar Land, Texas)--As it prepares to cinch a $1.4 billion steel acquisition and start up a major hot-briquetted iron (HBI) plant in Ohio, Cleveland-Cliffs Incorporated (NYSE:CLF) (Cleveland, Ohio) reports its latest quarterly results were substantially better than those from earlier this year.
On Friday, Cleveland-Cliffs reported net income of $2 million for the just-ended quarter, down sharply from $91 million in net income in the prior-year third quarter, but an improvement from a $108 million net loss in the second quarter of this year.
Third-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) were $126 million, representing a $200 million recovery from the second quarter, and reflecting an upturn in steel demand by the U.S. automotive market, said Chief Executive Officer Lourenco Goncalves during Cleveland-Cliffs' earnings conference call with industry analysts.
"We were significantly affected (in the second quarter) by the unprecedented shutdowns that took place throughout the entire auto sector, for an extended period of time of more than 10 weeks," Goncalves said. A market upswing began to materialize in the second month of the third quarter, he said, adding: "We prepared our operations to be ready when the uptick in demand inevitably came and our clients would be back asking for just-in-time delivery."
During the just-ended quarter, the company's flat-rolled steel volumes increased 80% to 1.1 million tons from 619,000 tons in the second quarter.
"The increase was almost entirely driven by the automotive market, which made up 73% of our sales," Goncalves said. That percentage compares with 66% of the company's sales in 2019. He noted that AK Steel, which was acquired by Cleveland-Cliffs in early 2020, "has been supplying exposed parts to the automotive industry for a long, long time and from several different locations."
Demand for autos "is growing and traveling by car is trendy again for individuals and families" as a result of the COVID-19 pandemic and health-related concerns over travel by rail, air and ride-sharing, Goncalves said. For related information, see October 9, 2020, article - U.S. Automakers Prep for Maintenance Wave as Post-Lockdown Demand Skyrockets.
For 2020, the iron-mining and steel-making company has lowered its expected capital expenditures to $500 million from $535 million. Industrial Info is tracking $1.3 billion worth of active projects by Cleveland-Cliffs, including the soon-to-be-completed HBI plant in Toledo, Ohio. Goncalves said he expects the plant to start production in a few weeks.
The plant will produce 1.8% carbon HBI to be consumed in-house for the remainder of this year, and will produce 3% carbon HBI for the marketplace starting next year, he said. For more information, see Industrial Info's project report.
Cleveland-Cliffs also expects to close on its acquisition of nearly all of the operations of ArcelorMittal USA LLC by the end of this year, to become the largest producer of flat-rolled steel in North America. With the acquisition from ArcelorMittal S.A. (NYSE:MT) (Luxemburg City, Luxemburg), Cleveland-Cliffs will be adding three integrated steel operations with a combined capacity of 16.2 million tons per year, including ArcelorMittal's Cleveland facility in Ohio, and the Indiana Harbor and Burns Harbor complexes, both in Indiana. For more information, see September 29, 2020, article - The Iron Giant: Cleveland-Cliffs Strives for Bigger, Better Things with ArcelorMittal USA Acquisition.
Cleveland-Cliffs still plans to become a merchant seller of HBI, Goncalves said, but with its AK Steel operations and the acquisition of ArcelorMittal USA, the company plans to redirect a "relative portion" of its own electric arc furnace, basic oxygen furnace and blast furnace operations.
The new Toledo HBI plant will have the capacity to produce 1.9 million tons per year. Goncalves said at least 1.1 million tons per year would be sold on the market, and the remainder consumed internally.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
On Friday, Cleveland-Cliffs reported net income of $2 million for the just-ended quarter, down sharply from $91 million in net income in the prior-year third quarter, but an improvement from a $108 million net loss in the second quarter of this year.
Third-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) were $126 million, representing a $200 million recovery from the second quarter, and reflecting an upturn in steel demand by the U.S. automotive market, said Chief Executive Officer Lourenco Goncalves during Cleveland-Cliffs' earnings conference call with industry analysts.
"We were significantly affected (in the second quarter) by the unprecedented shutdowns that took place throughout the entire auto sector, for an extended period of time of more than 10 weeks," Goncalves said. A market upswing began to materialize in the second month of the third quarter, he said, adding: "We prepared our operations to be ready when the uptick in demand inevitably came and our clients would be back asking for just-in-time delivery."
During the just-ended quarter, the company's flat-rolled steel volumes increased 80% to 1.1 million tons from 619,000 tons in the second quarter.
"The increase was almost entirely driven by the automotive market, which made up 73% of our sales," Goncalves said. That percentage compares with 66% of the company's sales in 2019. He noted that AK Steel, which was acquired by Cleveland-Cliffs in early 2020, "has been supplying exposed parts to the automotive industry for a long, long time and from several different locations."
Demand for autos "is growing and traveling by car is trendy again for individuals and families" as a result of the COVID-19 pandemic and health-related concerns over travel by rail, air and ride-sharing, Goncalves said. For related information, see October 9, 2020, article - U.S. Automakers Prep for Maintenance Wave as Post-Lockdown Demand Skyrockets.
For 2020, the iron-mining and steel-making company has lowered its expected capital expenditures to $500 million from $535 million. Industrial Info is tracking $1.3 billion worth of active projects by Cleveland-Cliffs, including the soon-to-be-completed HBI plant in Toledo, Ohio. Goncalves said he expects the plant to start production in a few weeks.
The plant will produce 1.8% carbon HBI to be consumed in-house for the remainder of this year, and will produce 3% carbon HBI for the marketplace starting next year, he said. For more information, see Industrial Info's project report.
Cleveland-Cliffs also expects to close on its acquisition of nearly all of the operations of ArcelorMittal USA LLC by the end of this year, to become the largest producer of flat-rolled steel in North America. With the acquisition from ArcelorMittal S.A. (NYSE:MT) (Luxemburg City, Luxemburg), Cleveland-Cliffs will be adding three integrated steel operations with a combined capacity of 16.2 million tons per year, including ArcelorMittal's Cleveland facility in Ohio, and the Indiana Harbor and Burns Harbor complexes, both in Indiana. For more information, see September 29, 2020, article - The Iron Giant: Cleveland-Cliffs Strives for Bigger, Better Things with ArcelorMittal USA Acquisition.
Cleveland-Cliffs still plans to become a merchant seller of HBI, Goncalves said, but with its AK Steel operations and the acquisition of ArcelorMittal USA, the company plans to redirect a "relative portion" of its own electric arc furnace, basic oxygen furnace and blast furnace operations.
The new Toledo HBI plant will have the capacity to produce 1.9 million tons per year. Goncalves said at least 1.1 million tons per year would be sold on the market, and the remainder consumed internally.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
