Cliffs narrows losses, sees strong demand, tight supply amid rising auto volumes

Company executives on an earnings conference call on Monday said the steelmaker’s order book was full thanks to automotive OEMs increasing bookings. Lead times have also extended, allowing mills to run tighter schedules and improve efficiency, they added.

Q1 results

First-quarter revenues improved 14% sequentially and 6% year over year to $4.92 billion. Cliffs’ Q1 net loss of $237 million was much improved from a net loss of $498 million a year earlier and slightly better than the Q4’25 net loss of $243 million.

Shipments reached just over 4.1 million short tons in Q1, up more than 300,000 st sequentially. The Q1 product mix consisted of 44% hot rolled, 29% coated, 15% cold rolled, 5% plate, 4% slabs, and 3% stainless and electrical.

Q2 and Q3 Outlook

Management of the Cleveland-based steelmaker expects Q2 shipments to rise further and to remain at an elevated level. Why? Automotive shipments hit their highest level in nearly two years and are projected to increase again in Q2.

Pricing momentum is also building. Average Q1 selling prices rose $55/st sequentially and $68/st year over year. Cliffs expects another $60/st increase from Q1 to Q2 as longer contract lags push current spot market strength into realized results. The company noted pricing lags have stretched from one month to nearly two months as schedules fill.

Cost pressures were significant in Q1 due to extreme cold weather and energy price spikes. The company reported an $80 million EBITDA impact stemming from higher prices for natural gas, electricity, and industrial gases. Diesel and freight costs tied to geopolitical disruptions are also rising. Q2 costs are expected to increase by another $15/st due to outages and mix, before falling sharply in Q3 as utilization improves.

“Q2 is a big outage quarter,” Chief Financial Officer Celso Goncalves added on the call. A company spokesperson declined to provide specifics.

Cliffs expects Q2 to be its strongest quarter in nearly two years, with Q3 showing even greater earnings power as outages ease and pricing fully flows through.

“This company spent the last couple years fixing what needed to be fixed. That work is largely behind us,” Chairman, President, and CEO Lourenco Goncalves said. “We finally have the platform to perform and deliver from here.”

Automotive bread and butter

Automotive demand strengthened in Q1 and is set to rise again in Q2 as OEMs increase bookings and shift more components back to steel, executives said.

Cliffs said automotive shipments reached their highest level in nearly two years and will improve further as the year progresses.

Goncalves noted the move away from aluminum is accelerating across multiple automakers, calling it “meaningful” and already visible in production schedules.

“In my long career in this business, I have never seen so much momentum in substituting aluminum with steel,” he said.

The company has restarted its New Carlisle, Ind., electro-galvanizing line to support the shift.

Trade policy driving market tightness

Trade policy remains a major driver of domestic tightness. Imports into the US are at their lowest levels since 2009. Cliffs credited Section 232, the melt-and-pour mandate, and stricter enforcement on derivative products.

“Imported steel is now not only subjected to tariffs, it is structurally more expensive due to transportation costs, energy volatility, and geopolitical risk,” Goncalves said.

The company said Canada remains the missing piece, with foreign steel still being diverted into that market.

Update on POSCO partnership

On the POSCO partnership, discussions remain active but have slowed due to geopolitical disruptions.

Cliffs emphasized that its own market position has strengthened since talks began, reducing the urgency of inking a final deal.

“Ongoing disruption in the Middle East has made Cliffs’ competitive position stronger and underscores why global steel producers want to partner with Cleveland-Cliffs,” Goncalves said. “We are still engaged … but we are no longer in a hurry. … Our situation is getting better, and that is changing our perception on how this deal should be taken care of.”