Why Cleveland-Cliffs Rallied Today

Shares of Cleveland-Cliffs (CLF) rallied 5.6% on Tuesday as of 2:26 p.m. ET.

Today, a U.S. steel producer announced their second-quarter profits, revealing that although revenue and profit declined compared to the same period last year, they surpassed predictions. Additionally, CEO Lourenco Goncalves expressed confidence that the latest rise in steel tariffs would eventually bring positive results for the company.

Cleveland delivers a beat, though it has a ways to go

During the second quarter, Cleveland-Cliffs experienced a 3.1% decrease in revenue, reaching approximately $4.9 billion. On the other hand, their adjusted earnings per share (EPS) switched from a profit of $0.11 per share in the same period last year to a loss of $0.50 per share this time around.

Although there were drops compared to the previous year, the results exceeded predictions. This quarter was particularly challenging for automakers due to the events surrounding April 2, known as “Liberation Day,” and the uncertainty that followed. It’s worth mentioning that the auto industry plays a substantial role in Cleveland Cliffs’ overall income.

Despite the recent steel tariffs, Goncalves maintained an upbeat outlook, suggesting that these tariffs could potentially benefit Cleveland-Cliffs more than they would negatively impact demand. This sentiment was expressed in their latest earnings statement.

It appears that tariffs are proving beneficial for domestic manufacturing, safeguarding domestic employment and national security interests. We anticipate this positive momentum to persist, boosting the revival of the American auto industry, bolstered by a robust domestic steel sector. Looking ahead, foreign competitors aiming to enter this promising market must establish their own steel production capacity within the United States. As a publicly traded U.S. corporation specializing in automotive, electrical steels, stainless, and plate, Cleveland-Cliffs’ resources, operations, and geographical presence offer a unique advantage in capitalizing on this evolving situation.

But much remains in doubt for Cleveland-Cliffs

I must admit, I’m always thrilled when Goncalves expresses such optimism about Cleveland-Cliffs. Yet, it’s not the first time his enthusiasm has been this high. As for the new tariffs, I can’t help but wonder how they might affect Cleveland-Cliffs in the short term. It’s a bit of a puzzle that needs more pieces to be solved!

Initially, the new tariffs led to a shutdown of one major blast furnace at Cleveland-Cliffs, as well as either complete closure or partial shutdown of several iron ore mines. Although tariffs reduced foreign competition, imports of finished steel have decreased only by 5 percentage points, from 25% in January to 20% in May. Despite management’s prediction of increased domestic demand for steel and a decrease in exports over time, there is currently little concrete evidence supporting the significant advantage for domestic steel producers.

Currently, Cleveland Cliffs is trying to save money and generate cash flow to repay its debts by reducing expenses. Given this situation, it might be wiser for investors to adopt a watchful stance, waiting to see if the claimed tariff advantages actually become reality. At present, there’s too much ambiguity to jump on the current stock market surge.

2025-07-22 22:33

Cleveland delivers a beat, though it has a ways to go

But much remains in doubt for Cleveland-Cliffs

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