Cleveland-Cliffs to Overcome Near-Term Headwinds With Stelco Acquisition

Cleveland-Cliffs (NYSE: CLF) has evolved from a traditional iron ore miner into a dominant integrated steelmaker in North America, driven by a series of transformative acquisitions. Its latest move—the $3.85 billion purchase of Canadian steelmaker Stelco (TSX: STLC) in November 2024—cements its position as the region’s leading flat-rolled steel producer. The acquisition enhances Cliffs’ market diversification, strengthens its presence in Canada, and expands its production footprint. Notably, Stelco will operate as a wholly-owned subsidiary of Cleveland-Cliffs.

Despite this strategic growth, the company faces near-term headwinds. Sluggish demand for automotive steel, a key segment, is weighing on performance. Visible Alpha consensus estimates project a -12% year-over-year decline in Cleveland-Cliffs’ 2024 revenues to $19.3 billion, sharper than the -4% dip seen last year. Steel, which accounts for 88% of Cliffs’ revenues, is forecasted to generate $17 billion—a year-over-year drop of -12%. This weakness is attributed to lower steel sales volumes, projected to fall -5% to 15.6 million tons, alongside a -7% decline in average realized prices to $1,089 per ton.

However, a rebound is on the horizon for 2025. The Stelco acquisition is expected to significantly bolster production capacity, particularly for hot-rolled steel. Hot-rolled steel, which represents 35% of Cliffs’ steel sales volume, is projected to see sales volume surge +30% year-over-year in 2025, adding 7.1 million tons to total steel volume. Correspondingly, hot-rolled steel revenues are estimated to jump +33% year-over-year to $5.7 billion, driving total steel revenues up +8% to $18.3 billion. Analysts also forecast a sharp recovery in Cleveland-Cliffs’ EBITDA, projecting a substantial increase in 2025.