Cleveland-Cliffs Q4 Earnings Call Highlights

Core Insights - Cleveland-Cliffs is reallocating melting capacity from low-margin slab orders to higher-margin flat-rolled products, anticipating continued demand for domestically produced slabs [1] - The company is experiencing improved market conditions entering 2026, driven by 50% Section 232 tariffs, melted-and-poured requirements, and new galvanizing capacity in the U.S. [2][5] - The expiration of the ArcelorMittal slab agreement is expected to significantly enhance earnings, with an estimated EBITDA benefit of around $500 million [6][11] Market Dynamics - Steel imports are negatively impacting the domestic market, creating a demand gap that has affected shipments and utilization through 2025 [2] - The company signed multi-year fixed-price contracts with major OEMs, which is expected to secure high-margin business and increase market share [4][7] - U.S. vehicle production fell for the third consecutive year in 2025, yet Cleveland-Cliffs is positioned to absorb incremental automotive demand without needing new plants [8] Financial Performance - Total shipments for Q4 2025 were reported at 3.8 million tons, with expectations to improve to about 4 million tons in Q1 2026 [13] - The realized price in Q4 2025 was $993 per net ton, down $40 per ton, but a $60 per ton improvement is anticipated in Q1 2026 [14] - The company has achieved three consecutive years of unit cost reductions, with a projected additional reduction of $10 per ton in 2026 [15] Capital Expenditure and Asset Management - Capital expenditures for 2025 were $561 million, the lowest on record, with projections of about $700 million for 2026 [16] - Cleveland-Cliffs has closed the sale of FPT Florida and is on track for $425 million in total proceeds from sales of idled properties [20] - The company is focusing on generating EBITDA and cash flow to pay down debt, with total liquidity at the end of 2025 reported at $3.3 billion [21] Strategic Initiatives - The company is actively pursuing a memorandum of understanding with POSCO, which is considered a strategic priority [18][19] - Cleveland-Cliffs has redirected Stelco's output to the Canadian market, which has faced pricing challenges but is expected to improve [17]