Cleveland-Cliffs Inc. (CLF) stock fell in Tuesday's premarket trading after surging more than 16% in the previous session following the steelmaker's strongest quarterly performance in three years.
The company reported adjusted earnings of 28 cents per share, beating analysts' estimate of 19 cents. However, revenue of $5.612 billion missed the consensus estimate of $5.724 billion.
Third-quarter adjusted EBITDA rose to $612 million from $286 million in the second quarter. Steel shipments reached 4.2 million net tons, while average selling prices increased by $53 per ton to $1,177.
Fourth-Quarter EBITDA Expected to Improve
Cleveland-Cliffs expects fourth-quarter adjusted EBITDA of $715 million, about $100 million higher than in the third quarter.
The company expects steel shipments to remain strong, although holidays, colder weather and scheduled maintenance could affect operations.
Management also expects average selling prices to improve as higher market prices translate into shipments from existing orders.
2027 Contracts Could Boost EBITDA by Over $1 Billion
Cleveland-Cliffs said negotiations for 2027 contracts are progressing well. Nearly all service-center and end-user customers are seeking higher contracted steel volumes than in 2026.
The company expects revised contracts covering much of its non-automotive light flat-rolled steel business to generate more than $1 billion in additional EBITDA in 2027, excluding changes in market pricing indices.
The contracts take effect Jan. 1, 2027. Higher fixed prices and smaller discounts on index-linked agreements should begin lifting results in the first quarter.
Management said Cleveland-Cliffs could average more than $1 billion in quarterly adjusted EBITDA in 2027 under prevailing market conditions.
Stronger contributions from its Canadian Stelco operations should also support growth as existing orders turn into shipments.
Coal contract negotiations for 2027 concluded at unchanged prices, providing stability in a key raw-material cost category.
Assuming market conditions remain similar to the third quarter, Cleveland-Cliffs sees a path to more than $4 billion in adjusted EBITDA for 2027. That could make it the company's strongest year since its record performance in 2021.
Cleveland-Cliffs Says Steel Prices Have Yet to Peak
During Monday's earnings call, CEO Lourenco Goncalves said he believes U.S. steel prices have yet to peak, despite expectations among some customers that prices could ease.
Management described the domestic steel market as its strongest pricing environment in three years. U.S. steel index prices have risen by roughly $40 per ton each month through much of 2026, while customer demand remains strong.
Buyers are increasingly focused on securing supplies rather than negotiating lower prices. As a result, Cleveland-Cliffs expects average selling prices to increase another $45 to $55 per ton in the fourth quarter.
The company also expects trade protections to support domestic prices. Steel imports remain 35% to 40% below pre-tariff levels following the introduction of 50% Section 232 tariffs.
Meanwhile, higher transportation costs, longer delivery times and currency risks have made imported steel less attractive, strengthening the outlook for U.S. producers.
CLF Price Action: Cleveland-Cliffs shares were down 1.99% at $13.82 during premarket trading on Tuesday, according to market data.
