Cleveland Cliffs Inc (CLF)

[DewDiligence]

US steelmakers expect higher profits in 2Q22 and beyond:

https://www.wsj.com/articles/rebounding-demand-rising-prices-boost-u-s-steelmakers-profits-11650656313

Steelmakers said demand is rebounding after a slump earlier this year, driven by booming construction and heavy equipment industries, and slowly expanding automotive production.

…“Overall, the end markets that we serve, the underlying demand remains incredibly robust,” said Leon Topalian, chief executive of Nucor Corp… “You’re going to see a very quick recovery,” he said during a conference call. Mr. Topalian on Thursday said Nucor’s second quarter ending in June is on course to yield a record quarterly profit.

…Cleveland-Cliffs Chief Executive Lourenco Goncalves said Friday the higher raw material costs will keep prices for finished steel in the U.S. elevated for the remainder of the year. Lower exports of finished steel from Russia also will shrink global steel supplies, he said, raising steel prices in Europe and other countries that usually bought Russian steel.

Cleveland-Cliffs has its own supply of iron ore in the U.S., and a plant in Ohio to reduce it to concentrated iron [i.e. HBI] that can be melted in electric furnaces like pig iron to make steel. The company last year bought a chain of scrapyards to lessen its exposure to the volatile scrap market. “We will benefit through higher margins on steel because our cost structure is not nearly as impacted,” Mr. Goncalves said.

…Cleveland-Cliffs said it renegotiated six-month customer contracts starting in April with higher prices. The company raised its forecast average selling price for its steel this year to $1,445 a ton, up $220 from its prior estimate. “The April contracts were a big success,” Mr. Goncalves said. “We were able to achieve everything we were planning for.”