Cleveland-Cliffs Inc.
CLFBusiness Overview
source: coverage-next-full ticker: CLF step: "01" title: Business Overview created: 2026-05-29
Step 01 — Business Overview: Cleveland-Cliffs Inc.
Company Description
Cleveland-Cliffs Inc. is the largest flat-rolled steel producer in North America, operating a fully integrated steelmaking model that spans from iron ore mining in the Upper Peninsula of Michigan and Minnesota to finished steel products delivered to automotive OEMs, appliance manufacturers, and infrastructure customers across North America.
Following the 2020 dual acquisitions of AK Steel and ArcelorMittal USA, CLF controls approximately 25 million net tons of steelmaking capacity — roughly double any other US flat-rolled producer. The addition of Stelco (2024) brings Canadian production assets into the portfolio.
The Integrated Steel Model
CLF's vertical integration is its defining competitive characteristic. The production chain flows:
1. Iron Ore Mining & Pelletizing
- Operates iron ore mines in Michigan (Tilden, Empire) and Minnesota (Hibbing Taconite, United Taconite, Northshore Mining)
- Produces approximately 28–29 million long tons of iron ore pellets annually
- Captive supply satisfies most of CLF's own blast furnace requirements; surplus sold to third parties
- Pellets are a superior feedstock vs. sinter/lump ore — higher iron content, better blast furnace efficiency
2. Blast Furnace Steelmaking (BOF — Basic Oxygen Furnace)
- Operates blast furnaces at: Burns Harbor (Indiana), Cleveland (Ohio), Indiana Harbor (Indiana), Middletown (Ohio), Dearborn (Michigan), Riverdale (Illinois)
- BOF route is CLF's primary steelmaking method — hot metal from blast furnace → basic oxygen converter → liquid steel
- More capital-intensive than EAF but produces premium quality grades required by automotive customers
3. Electric Arc Furnace (EAF) Steelmaking
- Acquired AK Steel brought EAF capability at Butler (Pennsylvania) and Mansfield (Ohio)
- EAF uses recycled scrap; complements BOF capacity
- Lower fixed cost structure but uses scrap (higher variable cost when scrap prices rise)
4. Finishing Operations
- Hot Rolling Mills: produce hot-rolled coil (HRC) — the commodity benchmark product
- Cold Rolling Mills: produce cold-rolled coil (CRC) — thinner gauge, better surface quality
- Coating Lines: galvanizing (galvanized/galvalume) for auto/appliance, electrogalvanizing for auto body panels
- Stainless & Electrical Steel: produced at legacy AK Steel facilities (Middletown, OH; Zanesville, OH) — serves energy-efficient motors and transformers
End Markets
| End Market | Approximate Revenue Share | Key Products |
|---|---|---|
| Automotive | ~40% | Advanced High-Strength Steel (AHSS), coated, exposed panels |
| Infrastructure/Service Centers | ~25% | HRC, plates, structural |
| Appliances | ~10% | Coated sheet, stainless |
| Distributors/Converters | ~15% | Various flat-rolled |
| Packaging/Other | ~5% | Tin mill products |
| Iron Ore (external) | ~5% | Pellets to third parties |
Automotive Relationships — The Crown Jewel
CLF's automotive exposure is uniquely valuable. The company supplies steel to virtually every major North American auto assembly plant, including:
- Ford Motor Company (major customer — Dearborn facility proximity)
- General Motors
- Stellantis (Chrysler/Jeep/Ram)
- Toyota, Honda (transplant OEMs)
Automotive contracts are negotiated annually or multi-year, typically with index-based pricing — providing more stability than spot market sales. The auto relationship required AK Steel's premium finishing capabilities, which CLF did not have pre-acquisition.
Workforce & Labor Relations
CLF is the largest unionized employer in the US steel industry, with approximately 26,000–29,000 workers represented by the United Steelworkers (USW). Major labor contracts covering blast furnace and finishing operations were renegotiated in 2023.
Labor is both a competitive moat (skilled workforce for automotive-grade production) and a key risk (strike vulnerability, legacy benefit obligations). Pension and OPEB liabilities reflect decades of commitments to retired steelworkers.
CEO & Culture
CEO Lourenco Goncalves (since August 2014) has shaped CLF's aggressive, acquisitive culture. He has positioned CLF as the defender of American steelmaking jobs and Section 232 tariff permanence — creating a politically charged identity that resonates with union workers, politicians, and certain investors. This identity is both a brand asset and a strategic commitment to the domestic US steel market.
Financial Snapshot
source: coverage-next-full ticker: CLF step: "04" title: Financial Snapshot created: 2026-05-29
Step 04 — Financial Snapshot
Three-Year P&L Summary
| Metric | FY2021 | FY2022 | FY2023 |
|---|---|---|---|
| Revenue | $20.4B | $22.3B | $21.9B |
| Cost of Goods Sold | ~$16.1B | ~$18.2B | ~$19.0B |
| Gross Profit | ~$4.3B | ~$4.1B | ~$2.9B |
| Gross Margin | ~21% | ~18% | ~13% |
| EBITDA | ~$4.5B | ~$3.5B | ~$1.7B |
| EBITDA Margin | ~22% | ~16% | ~8% |
| D&A | ~$0.9B | ~$1.0B | ~$1.0B |
| EBIT | ~$3.6B | ~$2.5B | ~$0.7B |
| Interest Expense | ~$(0.4B) | ~$(0.3B) | ~$(0.3B) |
| Pre-tax Income | ~$3.2B | ~$2.2B | ~$0.4B |
| Tax Expense | ~$(0.7B) | ~$(0.5B) | ~$(0.1B) |
| Net Income | ~$2.5B | ~$1.6B | ~$0.3B |
| EPS (diluted) | ~$4.50 | ~$3.10 | ~$0.60 |
| Shares (diluted, M) | ~555M | ~510M | ~480M |
The 2021 Profit Peak — Understanding the Supercycle
FY2021 was a once-in-a-generation steel pricing event. COVID-19 disrupted global supply chains while simultaneously triggering massive fiscal stimulus and a goods demand boom. HRC spot prices in the US hit $1,900/ton (vs. a historical range of $400–900/ton), producing extraordinary margins.
CLF's FY2021 results were the first full year incorporating both AK Steel and ArcelorMittal USA, and the timing was exceptional — the company acquired two businesses at compressed cycle prices and immediately benefited from the supercycle. This windfall allowed CLF to pay down ~$2.5B+ in debt and repurchase ~15% of shares outstanding within 18 months.
Key insight: The 2021 EBITDA of ~$4.5B is NOT a normalized run-rate. Mid-cycle EBITDA (at ~$700–800/ton HRC) is approximately $1.5–2.0B.
2022–2023 Normalization
As HRC prices normalized from their supercycle peak, CLF's margins compressed sharply. This is exactly as expected for a cyclical business with high operating leverage:
- FY2022: Prices declining through the year, still elevated in H1 → $3.5B EBITDA
- FY2023: HRC averaging $700–800/ton for most of the year → $1.7B EBITDA
- FY2024: Continued normalization; auto sector headwinds from EV slowdown, weaker demand → estimated $1.0–1.4B EBITDA
Margin Analysis
Gross Margin: Highly cyclical (13–21% range). Variable costs (iron ore [captive, so transfer-priced], scrap, energy) set a floor.
EBITDA Margin: The blast furnace model has high fixed costs ($400–500/ton in fixed cost per ton capacity). At mid-cycle HRC ($750/ton), the integrated model earns 8–12% EBITDA margins. At supercycle prices ($1,500+), margins expand dramatically due to operating leverage.
Net Margin: Even more volatile than EBITDA — ranges from negative (trough cycles) to 12%+ (supercycle). Interest expense (~$300M/year) and the tax shield from depreciation ($1B+/year) are important factors.
EBITDA Bridge — Key Cost Components
| Cost Component | Annual Amount | Per-Ton Equivalent |
|---|---|---|
| Raw materials (iron ore — captive) | ~$3.5B | ~$140/ton |
| Purchased scrap (EAF input) | ~$1.0B | ~$40/ton |
| Energy (natural gas, electricity) | ~$1.2B | ~$50/ton |
| Labor (including benefits) | ~$3.0B | ~$120/ton |
| D&A | ~$1.0B | ~$40/ton |
| SG&A | ~$0.3B | ~$12/ton |
| Total cost/ton | ~$400–420/ton |
At $750/ton HRC, this implies ~$330–350/ton EBITDA margin... but the blended ASP across all products (including higher-value cold-rolled, coated, specialty) is typically $50–100/ton above HRC spot, so realized EBITDA is higher than a pure HRC analysis suggests.
Key Profitability Metrics
| Metric | FY2021 | FY2022 | FY2023 |
|---|---|---|---|
| Return on Equity | ~45% | ~28% | ~5% |
| Return on Assets | ~18% | ~11% | ~2% |
| ROIC | ~28% | ~17% | ~6% |
| FCF (operating CF - CapEx) | ~$2.8B | ~$1.9B | ~$0.5B |
| FCF Yield (on mkt cap) | High | High | Low (stock fell less than earnings) |
Tax Dynamics
CLF had significant deferred tax assets (NOL carryforwards) from prior loss years that partially sheltered 2021–2022 income. By 2023, the effective tax rate normalized toward the statutory ~21% rate. The large D&A from blast furnace assets creates ongoing tax shield benefits.
FY2024 Partial View
Through Q3 2024:
- Stelco acquisition closed, adding Canadian capacity
- HRC prices ranged $600–800/ton — below mid-cycle
- Automotive production below expectations (EV transition uncertainty)
- Full-year 2024 EBITDA estimate: ~$1.0–1.4B
- Stelco integration costs created near-term drag
The company entered 2025 with elevated leverage (Stelco acquisition funded partly with debt) and below-mid-cycle pricing — a challenging setup requiring either HRC price recovery or cost reduction to drive meaningful earnings improvement.
Deeper Financial Analysis
The fundamental tier adds 9 additional research dimensions for $CLF.