10-Q: Cleveland-Cliffs Reports Strong Q3 2026 Results Amidst Rising Steel Prices

Cleveland-Cliffs Inc. (CLF) announced a significant turnaround in its third quarter of 2026, reporting a net income of $152 million, a substantial improvement from a net loss in the prior year, driven by robust steel pricing and strategic operational efficiencies.

Summary

• Cleveland-Cliffs Inc. reported a net income of $152 million for the third quarter of 2026, a significant improvement from a net loss of $251 million in the same period of 2025.
• Total revenues for the third quarter of 2026 increased by 19% to $5.612 billion, compared to $4.734 billion in the prior year, driven by higher steel pricing and increased shipments.
• The Steelmaking segment saw a substantial increase in Adjusted EBITDA to $601 million from $129 million in the prior year, reflecting improved market conditions and operational performance.
• For the nine months ended September 30, 2026, the company reported a net loss of $230 million, an improvement from a net loss of $1.235 billion in the same period of 2025.
• The company ended the quarter with $77 million in cash and cash equivalents and $3.2 billion in total liquidity, including availability under its ABL Facility.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing as moderately positive, reflecting improved financial performance driven by higher steel prices and strategic operational adjustments, though some risks and ongoing challenges remain.

Positives

• Significant improvement in net income to $152 million in Q3 2026 from a net loss of $251 million in Q3 2025.
• Total revenues increased by 19% to $5.612 billion in Q3 2026, driven by a 42% increase in domestic HRC pricing.
• Steelmaking segment Adjusted EBITDA surged to $601 million in Q3 2026, up from $129 million in Q3 2025, indicating strong operational performance.
• Average selling price for steel products increased to $1,177 per net ton in Q3 2026, up from $1,032 in Q3 2025.
• Steel shipments increased by 3% in Q3 2026 compared to the prior year.
• The company maintained strong liquidity with $3.2 billion in cash and ABL Facility availability as of September 30, 2026.
• Strategic shift towards higher-margin hot-rolled steel sales after the conclusion of an unprofitable slab supply contract.

Negatives

• The company reported a net loss of $230 million for the nine months ended September 30, 2026.
• Inventories decreased by $340 million for the nine months ended September 30, 2026, indicating a reduction in raw material stock.
• Accounts receivable increased by $508 million for the nine months ended September 30, 2026, potentially reflecting higher sales or slower collections.
• The company idled finishing operations at its Hamilton Works facility in Canada due to weak demand for value-add sheet products.

Risks

• Continued volatility of steel, scrap metal, and iron ore market prices.
• The highly competitive and cyclical steel industry, with reliance on automotive demand.
• Potential weaknesses in global economic conditions, excess global steelmaking capacity, and prevalence of steel imports.
• Risks associated with U.S. and Canadian government trade policies, tariffs, and potential retaliatory measures.
• Impacts of extensive governmental regulation, including environmental regulations related to climate change and carbon emissions.
• Supply chain disruptions or changes in the cost, quality, or availability of energy sources, raw materials, and critical equipment.
• Challenges in implementing strategic capital projects on time and on budget, such as the Middletown Works investment.
• Uncertainties related to the potential partnership with POSCO and the exploration of rare earth mineral extraction.

Future Outlook

The company anticipates continued domestic steel demand growth, supported by implemented tariffs and remaining unattractive import levels. Rising global steel costs and freight rates are expected to further support domestic demand and pricing. The automotive sector is expected to see improved domestic production, benefiting Cliffs as a key supplier. The company expects rising domestic steel demand and lower imports to offset inflationary cost increases.

Management Comments

• Domestic HRC pricing averaged $1,195 per net ton during the third quarter of 2026, a 42% increase compared to the third quarter of 2025, and the highest quarterly average per net ton since the second quarter of 2022.
• The strong commitment of President Trump's administration to the resilience of the Section 232 national security tariffs is helping the competitive landscape by reducing the prevalence of dumped steel in the U.S. market, ultimately leading to increased domestic demand.
• As a leading supplier of automotive-grade steel in the U.S., we expect to benefit from improved domestic vehicle production over the coming years as we continue to be an established and reliable supplier.
• We expect rising domestic steel demand, along with lower imports, to support higher steel prices, which we would expect to more than offset any inflationary costs we experience as a result of the war with Iran.
• The Middletown Works investment includes state-of-the-art upgrades to its blast furnace, advanced material handling and artificial intelligence-enabled process control technologies.

Industry Context

StockSavvy.ai notes that Cleveland-Cliffs' performance is strongly tied to the cyclical steel industry, which is currently benefiting from protective trade policies (Section 232 tariffs) and a recovery in automotive demand. The company's vertical integration and focus on value-added products, particularly for the automotive sector, position it to capitalize on these trends, while global tensions and supply chain shifts further bolster domestic production advantages.

Comparison to Industry Standards

• Domestic HRC pricing averaged $1,195 per net ton in Q3 2026, which is noted as the highest quarterly average since Q2 2022, indicating a strong recovery in steel prices.
• Year-to-date total steel imports through August 2026 declined 15% compared to the same period in 2025, suggesting a more favorable competitive landscape for domestic producers like Cliffs.
• The average age of light vehicles on the road in the U.S. is 12.8 years, an all-time high, which is expected to drive demand for automotive steel as older vehicles require replacement.
• Cliffs' Scope 1 and 2 emissions have been reduced from 1.82 to 1.64 metric tons of CO2e per metric ton of crude steel produced in 2025, which is stated to be significantly lower than the global industry average.
• The company's direct automotive shipments in Q3 2026 reached their highest level since Q3 2023, aligning with a recovery in the automotive sector.

Legal Proceedings

• The company is subject to various claims and legal proceedings incidental to its current and historical operations, but does not believe any pending claims or legal proceedings will result in a material adverse effect on its financial position or results of operations.
• Environmental matters are subject to SEC regulations, with a threshold of $1 million for disclosing proceedings where a governmental authority is a party and monetary sanctions are possible.

Stakeholder Impact

• Shareholders are likely to see positive impacts from improved financial performance and potential future growth driven by strategic initiatives.
• Employees may benefit from improved company performance, though operational adjustments like facility idles could have localized impacts.
• Customers, particularly in the automotive sector, are expected to benefit from reliable supply of high-quality domestic steel.
• Suppliers may experience changes in demand based on operational adjustments and inventory levels.

Next Steps

• Continue to optimize the fully-integrated steelmaking footprint.
• Utilize artificial intelligence to improve operational efficiency through a partnership with Palantir Technologies.
• Advance the Middletown Works investment project, a $1 billion total investment with the DOE, expected to be completed in 2030.
• Explore strategic opportunities, including a potential partnership with POSCO and rare earth mineral extraction.
• Focus on maximizing commercial strengths and bolstering position as an industry leader in automotive-grade steel.
• Continue to enhance environmental sustainability efforts.

Key Dates

Recommendation

The company has shown significant improvement in its quarterly results due to favorable market conditions and strategic execution. However, the cyclical nature of the steel industry, ongoing risks related to trade policies, and the reporting of a net loss for the year-to-date period suggest a 'hold' recommendation. While the positives are strong, the inherent volatility and forward-looking risks warrant a cautious approach until sustained profitability is demonstrated over multiple periods.

Keywords

steel production, automotive steel, hot-rolled steel, financial results, Adjusted EBITDA, steel pricing, tariffs, supply chain