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“There are a lot of potential catalysts that are brewing in the market that could be a benefit here in the short term,” Celso Goncalves, executive vice president and chief financial officer, said on the call.
The CFO explained: “Manufacturing onshoring will lead to demand. Imports are currently unattractive. There’s potential for increased trade protection. You’re going to see a lot of demand from the CHIPS [and Science] Act and the IRA [Inflation Reduction Act], and the auto industry eventually will rebound.”
Clarity after the conclusion of the presidential election was another factor contributing to the bullishness for 2025, according to executives on the call.
“Customers will start placing orders [after the elections], and things will start to heat up fast. I am anticipating a very strong Q1, and I believe that we are going to have volumes back to normal by the first half of next year,” Lourenco Goncalves, chairman, president and chief executive officer of Cleveland-Cliffs, said on Tuesday.
The bullishness for 2025 comes despite a dismal third quarter, with the steelmaker reporting a net loss of $230 million, compared with a net income of $275 million in the same quarter in 2023.
The company reported steel shipments of 3.8 million net tons for the third quarter, down from 4.1 million tons shipped in the third quarter of 2023.
The weakness in automotive demand was driven by high interest rates, the CEO said on the call.
Cleveland-Cliffs’ idled No6 blast furnace (BF) at its flat-rolled steel mill in Cleveland, Ohio, is expected to resume operations in early 2025, Lourenco said on the call.
The BF was temporarily idled due to ongoing demand weakness, and took an estimated 1.5 million tons of annual capacity off the market, Celso told investors.
Both Goncalves said on the earnings call that the BF will resume operations when demand improves.
“We will bring [BF6] back as soon…as demand comes back, which will come back when pricing recovers. I believe that the price recovery [will come back] early 2025, so I expect that we’re going to bring [BF6] back sometime early next year,” Lourenco said.
On the call, Cleveland-Cliffs provided updates on the company’s facilities in Middletown, Ohio; Butler, Pennsylvania; and Weirton, West Virginia.
“We have received phase one funding approvals through the Department of Energy for our efficient projects at Middletown and Butler, allowing us to proceed,” Lourenco said.
The Energy Department awarded an initial $9.5 million for the first phase of a project to demonstrate hydrogen-based ironmaking decarbonization technology at Cleveland-Cliffs’ Middletown Works in Middletown, Ohio, the Department announced on Wednesday September 25.
The project is expected to reduce greenhouse gas emissions by 1 million tonnes per year, the Department said.
The Middletown plant is expected to be operational by 2027, and the company’s Butler facility by late 2026 to early 2027, Lourenco said on the call.
The steelmaker’s transformer plant at Weirton, West Virginia, is on schedule to be operational by the fourth quarter of 2025.
“We have all of the necessary equipment ordered to begin making transformers in late 2025, early 2026,” Lourenco said.
The new transformer plant is expected to utilize carbon steel and stainless steel produced by Cleveland-Cliffs, which is the sole domestic producer of grain-oriented electrical steel (GOES).
GOES is a key component in electric vehicles (EVs) and is used in the motors and generators of EVs and hybrid cars.
Cleveland-Cliffs has previously said the investment in the production of electrical transformers will create more demand for US-made GOES, which is in very short supply.
The transition to EVs by the steelmaker’s automotive customers is not as fast as initially expected, Lourenco said on the call on Tuesday.
“Actually, some [clients] are really doing a completely [180-degree turn] on their strategies and going back to [internal combustion engine] and some [are] starting hybrid [vehicles],” the CEO said. “So, we are taking the automotive clients with a grain of salt going forward, and that makes us less eager to be spending money to change things here.”
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