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Friday, 07/23/2021 1:22:25 PM

Friday, July 23, 2021 1:22:25 PM

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'Relentless' steel demand prompts another Cleveland-Cliffs guidance raise

Jul. 22, 2021 7:25 PM ETCleveland-Cliffs Inc. (CLF)Cleveland-Cliffs Inc. (CLF)By: Carl Surran, SA News Editor

Cleveland-Cliffs (NYSE:CLF) again raised its FY 2021 adjusted EBITDA guidance to $5.5B from earlier estimates of $4B and $5B, helping the stock to recoup nearly all its big morning loss after missing Q2 earnings estimates.

"Demand for steel is very strong across all sectors, and strong demand supports strong prices," Cliffs CEO Lourenco Goncalves said on today's earnings conference call. "Q4 2020 was supposed to be the peak for steel prices, then Q1 2021 and then again in Q2. Well, we are in Q3, and the reality is demand is relentless."

Shares opened deep in the red this morning, apparently on the perception that - based on the company's $5B full-year adjusted EBITDA guidance and the Q3 forecast of $1.8B - would come in at a "conservative" ~$1.3B, given the first six months' total of $1.87B.

On the call, Goncalves also said Cleveland-Cliffs has the lowest carbon footprint of all integrated steelmakers, and other countries' programs to cut emissions from their steel industries amounted to government-supplied "gifts" and "handouts" that give foreign steelmakers an unfair advantage over U.S. producers.

"That's another compelling reason why imports need to be held in check as other countries take advantage of a totally uneven playing field with their much worse environmental performance than ours [with] major government subsidies," the CEO said.

Cleveland-Cliffs is "very well positioned as a fully vertically integrated steel producer, [and] 2020 acquisition activities are beginning to improve margins," Bill Gunderson writes in a bullish analysis posted on Seeking Alpha.

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