Cliffs expects to see a rebound in the US steel price: CEO

End-user demand for flat-rolled steel products in North America has remained "pretty healthy" despite more limited buying seen from service centers, with a rebound in pricing expected as uncertainty that has clouded the market moves to the rearview, Cleveland-Cliffs CEO Lourenco Goncalves said July 23.

US prices for hot-rolled coil have fallen 41% since the start of 2024 and were last assessed at $650/st on an ex-works Indiana basis July 22, according to S&P Global Commodity Insights data. The Platts TSI US HRC daily index has been at $650/st since July 12, with many in the market questioning if the bottom has been reached on pricing.

"Back in August of 2020, we could not move hot-rolled even at $444/st, then within four months, we're back above $1,000/st," Goncalves said during the US-based steelmaker's second-quarter conference call. "I'm not saying that this is an exact parallel, but it shows that as long as demand is there, which it is, things tend to look ugliest right before a sharp snap back."

To Goncalves, the market is one small catalyst away from a rebound, whether that be an interest rate cut, certainty around the November US presidential election, trade enforcement, or something unforeseen currently, he said.

When asked about the outlook for realized pricing in Q3, CFO Celso Goncalves said Cliffs would not be issuing guidance on pricing as the market is "overdue for a sharp bounce back."

"We feel like we're in a place right now ... that we're in the bottom of the cycle and things could change very quickly here this quarter," the CFO said, adding that, in terms of volumes, Cliffs expects to maintain shipments of about 4 million st in Q3.

Q2 results

Cliffs shipped 3.99 million st in Q2, down from 4.2 million st the same quarter of 2023, according to financial results released late July 22. Q2 shipments comprised 35% hot-rolled, 29% coated, 16% cold-rolled, 5% plate, 4% stainless and electrical, and 11% other, including slabs and rail, according to the company.

Of the company's total Q2 shipments, 30% accounted for direct sales to the automotive industry, representing its largest end market.

Cliffs' average Q2 selling price was $1,125/st, down from $1,255/st a year ago.

Looking ahead, the automotive sector "remans in good shape and orders from service center customers are expected to increase as seaborne steel imports dry up," CEO Goncalves said.

Overall, Cliffs reported Q2 attributable net income of $2 million on sales of $5.09 billion, compared with attributable net income of $347 million on sales of $5.98 billion a year ago.