Cleveland-Cliffs Sets Shipment Record in Q2

Cleveland-Cliffs Inc.(NYSE:CLF) reported Q2 2025 results on July 21, achieving a sequential adjusted EBITDA improvement of $271 million alongside record shipments of 4.3 million tons. Notable strategic developments included a $150 million investment in premium stainless production, clear acceleration of cost reduction programs, and the launch of non-core asset divestitures with several billion dollars of potential value at stake. The company reaffirmed a disciplined approach to capital allocation and highlighted its distinct advantage as a vertically integrated producer in a rapidly shifting North American steel landscape.

Accelerated Cost Reductions and Operational Optimization

Chief Financial Officer Celso Goncalves confirmed an unanticipated $15 per ton quarter-over-quarter cost reduction, reversing previous guidance for a cost increase, and Cleveland-Cliffs remains on track to achieve its annual $50 per ton unit cost reduction target for 2025. Shipment volumes rose by 150,000 tons to 4.3 million, boosting productivity and allowing for greater fixed-cost absorption across the manufacturing base.

"We had previously expected a slight unit cost increase quarter over quarter, but with the solid operating performance, we actually recorded a $15 per ton unit cost decrease."
— Celso Goncalves, Chief Financial Officer

This surprise outperformance demonstrates management’s ability to extract operational leverage, and creates a buffer for debt reduction.

Strategic Asset Portfolio Realignment and Capital Allocation Discipline

The engagement of JPMorgan and the initiation of non-core asset sales processes open a pathway for Cleveland-Cliffs to unlock hidden value, accelerate deleveraging, and potentially reshape its business mix. The company ended the quarter with $2.7 billion in liquidity, no near-term maturities, and active inbound interest in idled properties, particularly those attractive to data center developers for their location and infrastructure.

"We have now engaged JPMorgan as our advisor and launched sell-side processes to explore the potential sale of certain non-core operating assets. These selected assets could represent billions of dollars of value, and we will only sell these assets if the sum of the parts valuation unlocks trapped value for Cleveland-Cliffs Inc. shareholders."
— Celso Goncalves, Chief Financial Officer

Proactive asset monetization signals both recognition of the market’s undervaluation of Cleveland-Cliffs' individual components and a tactical plan to drive shareholder value beyond organic operational gains.

Vertically Integrated Business Model Amid Shifting Trade and Competitive Dynamics

The forthcoming 50% U.S. tariff on Brazilian pig iron, effective Aug. 1, will pressure U.S. competitors reliant on imports, while Cleveland-Cliffs’ hot briquetted iron plant in Toledo and internal coke production, further aided by Stelco integration, reinforce full feedstock independence. Section 232 tariff enforcement and shifts in automotive supply chains, including repatriation of production from Asia and Mexico, are repositioning pricing and supply contracts throughout the region.

"Cleveland-Cliffs Inc.'s vertically integrated business model differentiates us from the rest of the industry by being completely independent from imported feedstock."
— Lourenco Goncalves, Chairman, President, and Chief Executive Officer

This structural advantage inoculates the company against raw material price volatility and foreign supply shocks, further strengthening its competitive moat in the automotive steel market.

Looking Ahead

Management reiterated its guidance for a $50 per ton cost reduction in 2025 relative to 2024, and forecast further sequential cost declines of approximately $20 per ton from Q2 to Q3 and with continued reductions into Q4. Shipments are expected to remain at 4.3 million tons, with EBITDA projected to further improve quarter over quarter. Cleveland-Cliffs will use all excess free cash flow for accelerated debt reduction, with any proceeds from non-core asset sales going to supplement this deleveraging trajectory.

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