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Investing.com -- Cleveland-Cliffs shares fell Monday after the company reported weaker-than-expected preliminary fourth-quarter results, citing muted steel demand, particularly from the automotive sector.
The stock is down around 5%, trading at $9.74, as of 12:40 pm ET.
The steelmaker posted fourth-quarter revenue of $4.3 billion, slightly below consensus estimates of $4.44 billion. Adjusted EBITDA came in at a loss of $85 million, missing analyst expectations of a $25 million loss. Steel shipments totaled 3.8 million net tons.
CEO Lourenco Goncalves said, “Other than the COVID-impacted 2020, 2024 was the worst year for domestic steel demand since 2010.” He attributed the weakness to lower demand from automakers but noted that order trends have already improved in early 2025.
In its note following the release, Morgan Stanley (NYSE:MS) analysts said they expected the stock to trade higher despite the weak earnings, citing optimism around newly announced tariffs on Canada and Mexico.
“We expect the stock to trade higher today despite disappointing 4Q24 preliminary results — already expected by investors — based on tariff news on Canada/Mexico. US steel mills would reap the benefits of increased trade protections given the reduced competition and likely increased steel prices,” said the investment bank.
The firm believes U.S. steelmakers like Cleveland-Cliffs (NYSE:CLF) will benefit from reduced competition and potentially higher steel prices.
“CLF has seen improvements in their order book for both auto and non-auto shipments and management believes 4Q24 was the market trough,” Morgan Stanley noted.
Cleveland-Cliffs completed its acquisition of Stelco (TSX:STLC) Holdings in November, and Goncalves highlighted that Stelco is already contributing to the company’s expected synergies.
He also praised President Trump’s recent tariff actions, saying they could help usher in a “manufacturing renaissance” in the U.S.
“A level playing field in steel will set the foundation to usher in a new golden era and a manufacturing renaissance that will make America strong again,” stated Goncalves.
The company is set to release full earnings results on February 24.