SlobodanMiljevic
- Cleveland-Cliffs faces significant economic pressures and is expected to lose money in Q3 and Q4. Due to falling steel prices, its stock has declined 22% since I last covered it.
- Rising production costs and a slow-moving economic slowdown in US manufacturing have severely impacted CLF’s profitability, with gross margins dropping from 25% in 2021 to 3.2%.
- The American steel industry is struggling, with CLF and U.S. Steel particularly vulnerable due to overleveraging and inefficient operations compared to competitors like Nucor and Steel Dynamics.
- Despite potential government support, I remain bearish on CLF amid continued durable goods headwinds and overproduction in the US steel industry.
- Bipartisan protectionist attitudes regarding steel may give CLF minor risk protection, but I do not expect it to turn around until U.S. Steel is forced to dramatically lower production.
In July 2023, I published a bearish take on the U.S. steel (X) giant Cleveland-Cliffs (NYSE:CLF) in “Cleveland-Cliffs: Steelmakers Face Significant Recessionary Pressures.” Although there has not been an economic recession since then, CLF.
Harrison is a financial analyst who has been writing on Seeking Alpha since 2018 and has closely followed the market for over a decade. He has professional experience in the private equity, real estate, and economic research industry. Harrison also has an academic background in financial econometrics, economic forecasting, and global monetary economics.
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