Steel Maker Cleveland-Cliffs Forecasts Strong Second Half of Year

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Written by Eric Funderburk for IIR News Intelligence (Sugar Land, Texas)

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Summary

U.S. steel maker Cleveland-Cliffs Incorporated expects earnings to double between the second and third quarters of this year, boosted largely by U.S. tariffs on imported steel.

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Ongoing Earnings Acceleration

In the company's second-quarter earnings conference call, Cleveland-Cliffs Chief Executive Officer (CEO) Lourenco Goncalves was nothing if not effusive about the near- and long-term prospects for both the company and the U.S. steel sector in general as tariffs on foreign steel imports give a long-awaited boost to domestic producers.

Goncalves touted the company's forecast that it will more than double earnings before interest, taxes, depreciation and amortization (EBITDA) from the just-completed second quarter to the current third quarter, from $286 million to $575 million. The second quarter's $286 million in EBITDA was itself a $191 million improvement from first-quarter results. Second-quarter 2025 EBITDA was $97 million.

Industrial Info Resources is tracking more than $2.9 billion worth of current and planned capital projects from Cleveland-Cliffs, as well as more than 65 planned maintenance events from the company, valued at $257.4 million.

Goncalves said the third quarter would bring "a situation where higher prices, lower costs and higher shipping volumes will all be converging at once. Weather-related impacts are behind us. Finishing lines are full, and pricing remains strong." The CEO said the fourth quarter would be even better, and the improving results were expected to carry on into 2027.

Automotive Strength

Much of the company's improvement is coming from stronger demand from the U.S. automotive sector. Goncalves said shipments of steel to automotive clients in the second quarter were the highest in the past two years and that finishing lines, which had been running at suboptimal levels for years, are now running at a "healthy level of utilization" with favorable costs impacts.

Section 232 Tariffs

Goncalves largely credits his company's strengthening results to the Section 232 tariffs that the Trump administration has placed on imported steel, which with a few exceptions, slaps a 50% tariff on steel imported into the U.S. and a 25% tariff on derivatives not made entirely of steel.

Goncalves' remarks are worth quoting at length. According to the CEO, "This improving situation in both steel and automotive demand can be attributed to the long overdue trade policies we now have in place in the United States. Section 232 has been the single most effective industrial policy implemented in our country in a generation. ... The results are visible. Manufacturing investment is accelerating. Domestic steel utilization is improving. Capital is being allocated to U.S.-based production rather than offshore production. The reshoring movement that's now occurring throughout American manufacturing simply would not be happening at its current scale without Section 232 and the enforced mechanisms that support it."

Cleveland-Cliffs' Expanding Footprint

Goncalves is putting Cleveland-Cliffs' money where his mouth is. Of the total $2.9 billion in Cleveland-Cliffs capital projects being tracked by Industrial Info Resources, more than $125 million worth is presently under construction, largely for upgrades and additions to improve efficiencies and boost production. The company is underway with equipment upgrades and additions at steel mills in Indiana and Ohio, and at separate steel mills in the same states is underway with minor repairs to the basic oxygen furnace at its East Chicago, Indiana, works, and is performing refractory rebuilds for two electric arc furnaces at its Mansfield, Ohio, mill in order to improve operations.

The company's optimism even seems to be expanding outside of the U.S. as it engages in major upgrades to its mills in Nanticoke and Hamilton, Ontario. The company's Lake Erie mill in Nanticoke also is home to a developing demonstration-scale lithium-ion battery recycling facility, showing Cleveland-Cliffs is on some a path to make a profit in a way that could be considered conducive to environmental goals.

Those environmental goals are being carried one step further at yet another of the company's Indiana steel mills--this one its 5 million-ton-per-year Burns Harbor mill, where the company is implementing a carbon capture and storage (CCS) system with an aim of capturing between 50% and 70% of the CO2 from the facility's blast furnaces.

Future Considerations

Even larger undertakings are planned in the company's future, including the possible addition of a melt furnace in Ohio and major expansions and equipment additions at its Butler Steel Works in Pennsylvania.

Information on these and other past, present and future construction projects from Cleveland-Cliffs and other steel makers across the world can be found in Industrial Info Resources' coverage of the Metals & Industry, which includes all aspects of the industry, from mining to final refinement and processing.

Key Takeaways

• Cleveland-Cliffs EBITDA has been growing steadily throughout the year, and the company expects a doubling in earnings from the second to the third quarters of this year.
• The company's CEO Lourenco Goncalves attributed much of the company's strong results to increased demand from the automotive sector and the implementation of Section 232 tariffs on steel imported to the U.S.
• Industrial Info Resources is tracking $2.9 billion in current and future capital projects from Cleveland-Cliffs and another $257 million worth of planned maintenance events.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).