US integrated steelmaker Cleveland-Cliffs expects steel to rebound in early 2025 after weak demand — primarily across its major automotive customers — drove it into the red in the third quarter.
Cliffs faced tighter margins during the quarter prompted by a combination of weaker steel demand and pricing, which ultimately led it to temporarily idle its 1.51mn short ton (st)/yr No 6 blast furnace in Cleveland, Ohio, in September.
The company's chief executive Lourenco Goncalves said in the earnings release today that a number of economic and political factors are expected to drive a rebound in steel demand during early 2025.
Despite the bullish outlook, weaker automotive demand in the third quarter, as well as the underperformance of two out of its four top automotive clients, negatively impacted its profitability and steel shipments.
Cliffs' steel shipments totaled 3.8mn st in the third quarter, down from 4mn st a year earlier.
Hot-rolled coil (HRC) accounted for 36pc of sales volumes, followed by coated products at 28pc and cold-rolled at 17pc, and slab at 11pc, while plate and stainless/electrical each totaled 4pc.
Automotive shipments totaled 30pc in the third quarter for a second consecutive quarter, hovering at a low last seen in 2022. Its end market product mix for distributors and converters totaled 30pc, infrastructure and manufacturing 26pc and steel producers 14pc.
Cliffs' overall selling price fell to $1,045/st in the third quarter, down by 4pc compared with the prior year.
Cliffs closed on its acquisition of Canadian integrated steelmaker Stelco on 1 November which will operate as a wholly-owned subsidiary of Cliffs.
The company said it will benefit in the fourth quarter and beyond from the contribution of shipments from Stelco, which will drive its product mix further toward hot-rolled coil.
The company shipped 639,000st for the quarter, of which 66pc was hot-rolled coil, down from 3pc from the prior year. Stelco's third quarter average selling price per ton for its steel products was $725/st, down 7pc from $779/st (C$1,083/st) a year earlier.
Cliffs recorded a $242mn loss in the third quarter, swinging from a a $264mn profit a year earlier.
By Brad MacAulay
