US Election 2024: Cleveland-Cliffs Sees Steel Recovery Next Year Led by ‘Economic, Political Factors,’ But Retail’s Split

Cleveland-Cliffs Inc. ($CLF) shares dropped over 6% pre-market Tuesday after the company reported disappointing Q3 results and a subdued outlook. 

The flat-rolled steel company announced it anticipates a steel demand rebound in early 2025, driven by “economic and political factors.” 

CEO Lourenco Goncalves highlighted a trimmed capital budget for 2025, allowing for cost savings and debt reduction. 

Lower coal costs are expected to bring a $70 million benefit next year. Goncalves also pointed to strategic projects aimed at boosting annual earnings before interest, tax, depreciation, and amortization (EBITDA) by over $600 million once completed.

The Q3 report showed an adjusted loss per share of $0.33, worse than the consensus estimate of $0.27, and revenue of $4.6 billion, falling short of the $4.77 billion forecast. 

Cleveland-Cliffs noted challenges from weaker demand, lower pricing, and high exposure to the underperforming automotive sector, which led to temporarily idling its Cleveland #6 blast furnace. 

Although the company exceeded its aggressive cost-cutting targets, it couldn’t fully offset the impact of reduced automotive client performance. 

The company also lowered its full-year 2024 capital expenditures target by $50 million, now expected to range between $600 to $650 million.

The company’s reference to “political factors” regarding 2025 steel demand remains vague, though both presidential candidates — Donald Trump and Kamala Harris — have voiced support for the steel industry’s role in U.S. security and infrastructure. 

Both candidates oppose Nippon Steel’s bid for U.S. Steel Corp. ($X), for which Cleveland-Cliffs also placed a $35 per-share bid earlier this year.

Interestingly, the United Steel Workers Union also opposed the Nippon deal, preferring the lower-priced Cleveland-Cliffs merger.

On Stocktwits, retail sentiment around CLF remained neutral with a surge in message volume ahead of the U.S. election. 

While some users were bearish, criticizing the management and the company’s financial outlook, others speculated about potential gains if Trump were to win. 

Cleveland-Cliffs stock has declined over 30% year-to-date, lagging behind the SPDR S&P Metals & Mining ETF ($XME), which has risen 7%.

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