Cliffs' Q2 earnings hit by soft pricing, demand

Cleveland-Cliffs’ earnings tumbled in the second quarter on lower demand and pricing.

“Despite a less-than-ideal steel demand and weak pricing throughout the quarter, Cliffs operated very well,” Lourenco Goncalves, Cliffs’ chairman, president, and CEO, said in a statement on Monday.

Q2 Results

The Cleveland-based steelmaker logged net income attributable to its shareholders of $2 million in Q2’24. This is down 99% from $347 million a year earlier. Q2 sales slid nearly 15% to $5.09 billion in the same comparison.

The company shipped 3.99 million tons of steel in the quarter. This is off 5% from the same period last year. The volumes consisted of 35% hot rolled, 16% cold rolled, 29% coated, 5% plate, 4% stainless and electrical, and 11% other – including slabs and rail.

Cliffs included charges and losses totaling $47 million in its results. These primarily related to the indefinite idling of the Weirton tinplate facility in West Virginia in February. (Also, loss on debt repayments.)

Stelco

Goncalves said Cliffs was excited about the recently announced ~$2.5B acquisition of Canadian steelmaker Stelco.

“We have long admired Stelco, and are eager to incorporate one of the lowest cost flat-rolled steelmaking assets in North America into our footprint,” he said.

“We have continued to engage with all key stakeholders associated with the transaction, including the USW and high-level government officials,” Goncalves added.

Weirton transformer plant

He also touted the company’s pursuit of downstream opportunities.

“As we announced today in West Virginia, we are repurposing our Weirton tinplate plant to produce transformers,” Goncalves said.

He noted the transformers produced in Weirton would be sold directly to end users and other players in the electrical sector.

“This project will take advantage of our current under-utilized capacity to produce 30% to 40% more tonnage of American-made Grain Oriented Electrical Steels (GOES),” he continued.

GOES are produced domestically exclusively by Cliffs in Butler, Pa., Goncalves said.

Outlook

Cliffs is lowering its full-year-2024 expected capital expenditures range to $650 to $700 million. The previous range was $675 to $725 million.

Goncalves said that Cliffs’ largest end market, automotive, remains in good shape. Also, he noted that “orders from service center customers are expected to increase as seaborne steel imports dry up.”

He lauded M&A and downstream expansion as examples that Cliffs is still in the early stages of “the new Cleveland-Cliffs that was born in 2020 when we became a steel company.”

“We are clearly not finished yet, and the best is yet to come,” he concluded.

Recall that Cliffs at that time acquired the former AK Steel and the former ArcelorMittal USA. Those deals transformed the company from primarily an iron ore miner to one of the largest steelmakers in the US. They also significantly consolidated the domestic industry.