Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Cleveland-Cliffs raised its adjusted EBITDA guidance by 14pc to about $4bn for 2021, an increase of $500mn from its prior guidance of approximately $3.5bn, on contract renewal improvements and the probability that US hot-rolled coil (HRC) prices average $1,100/nt for the remainder of this year.


The flat-rolled steelmaker projects its Q2 adjusted EBITDA at $1.2bn. It indicated in a press release today that the current pricing environment will continue to provide benefits throughout 2021, and that its increased guidance is based on conservative price expectancies compared to recent pricing and the current upward trajectory. 


Cliffs plans to pay off a significant amount of its debt by generating record-high levels of free cash flow, to meet its targets at the end of this year. Q1 was Cliffs’ first full quarter that contained full business transformation and the company believes its top accomplishments will surface during the rest of the year.


The company’s external steel product sales tallied at 4.14mn nt (3.76mn mt) in Q1 2021, and comprised 33pc coated, 28pc hot-rolled, 18pc cold-rolled, 7pc plate, 4pc stainless and electrical, and 10pc other, including slabs and rail. Steel product volume was 197,000nt in Q1 2020.


Revenue from steelmaking was $3.92bn in Q1 2021 compared to $337mn in the prior-year. This includes $1.3bn or 33pc of sales to the automotive market, $1.2bn or 32pc of sales to the distributors and converters market, $954mn or 24pc of sales to the infrastructure and manufacturing market, and $430mn or 11pc of sales to steel producers.


Cliffs’ average net selling price of steel products declined by 8pc to $900/nt in Q1 2021 against $980/nt in Q1 2020. The decline was due to mix adjustments linked to the first full quarter including ArcelorMittal USA, cutting input of higher-priced coated, stainless, and electrical steel products.


The steel producer’s consolidated revenue increased to $4.05bn in Q1 2021 against $359mn in the prior-year quarter. It recorded a net income of $41mn in Q1 2021 compared to a net loss of $52mn in Q1 2020 while its adjusted EBITDA increased to $513mn from $23mn in the same period.

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