Cleveland-Cliffs Inc. (NYSE: CLF) today announced the
following updates on its latest commercial and operational
developments.
The Company affirmed that, with a large portion of its fixed
price contractual volumes already renewed in its most recent
negotiating cycles, Cliffs will achieve higher annual fixed prices
for steel in the calendar year 2023 compared to 2022. These
improved annual fixed prices are independent of the Company’s
recently announced price increases on spot steel sales.
Specifically, with higher sales volumes and a similar mix of hot
rolled, cold rolled and coated products, the Company expects from
its direct carbon steel automotive customers an average selling
price of approximately $1,400 per net ton in 2023, compared to an
expected full-year 2022 price of approximately $1,300 per net ton.
Direct carbon automotive sales represent Cliffs’ largest end
market, are performed entirely on a fixed price basis, and are not
influenced by spot prices.
Similarly, the Company has also achieved significantly higher
contractual fixed prices for its grain-oriented electrical steels
for 2023 compared to 2022, as well as meaningful increases in fixed
base prices for its non-oriented electrical steel and stainless
steel products, before surcharge impacts.
Fixed-price contracts are expected to represent 40-45% of the
Company’s steel volumes sold in 2023, and over 50% of total steel
revenue under the current futures curve for U.S. HRC.
Separately, as a result of lower input costs and normalized
repair and maintenance expenses, Cliffs also expects significantly
lower Steelmaking unit costs in 2023 compared to 2022.
About Cleveland-Cliffs Inc.
Cleveland-Cliffs is the largest flat-rolled steel producer in
North America. Founded in 1847 as a mine operator, Cliffs also is
the largest manufacturer of iron ore pellets in North America. The
Company is vertically integrated from mined raw materials, direct
reduced iron, and ferrous scrap to primary steelmaking and
downstream finishing, stamping, tooling, and tubing. We are the
largest supplier of steel to the automotive industry in North
America and serve a diverse range of other markets due to our
comprehensive offering of flat-rolled steel products. Headquartered
in Cleveland, Ohio, Cleveland-Cliffs employs approximately 27,000
people across its operations in the United States and Canada.
Forward-Looking Statements
This release contains statements that constitute
"forward-looking statements" within the meaning of the federal
securities laws. All statements other than historical facts,
including, without limitation, statements regarding our current
expectations, estimates and projections about our industry or our
businesses, are forward-looking statements. We caution investors
that any forward-looking statements are subject to risks and
uncertainties that may cause actual results and future trends to
differ materially from those matters expressed in or implied by
such forward-looking statements. Investors are cautioned not to
place undue reliance on forward-looking statements. Among the risks
and uncertainties that could cause actual results to differ from
those described in forward-looking statements are the following:
continued volatility of steel, iron ore and scrap metal market
prices, which directly and indirectly impact the prices of the
products that we sell to our customers; uncertainties associated
with the highly competitive and cyclical steel industry and our
reliance on the demand for steel from the automotive industry,
which has been experiencing a trend toward light weighting and
supply chain disruptions, such as the semiconductor shortage, that
could result in lower steel volumes being consumed; potential
weaknesses and uncertainties in global economic conditions, excess
global steelmaking capacity, oversupply of iron ore, prevalence of
steel imports and reduced market demand, including as a result of
inflationary pressures, the prolonged COVID-19 pandemic, conflicts
or otherwise; severe financial hardship, bankruptcy, temporary or
permanent shutdowns or operational challenges, due to the ongoing
COVID-19 pandemic or otherwise, of one or more of our major
customers, including customers in the automotive market, key
suppliers or contractors, which, among other adverse effects, could
disrupt our operations or lead to reduced demand for our products,
increased difficulty collecting receivables, and customers and/or
suppliers asserting force majeure or other reasons for not
performing their contractual obligations to us; disruptions to our
operations relating to the ongoing COVID-19 pandemic, including the
heightened risk that a significant portion of our workforce or
on-site contractors may suffer illness or otherwise be unable to
perform their ordinary work functions; risks related to U.S.
government actions with respect to Section 232 of the Trade
Expansion Act of 1962 (as amended by the Trade Act of 1974), the
United States-Mexico-Canada Agreement and/or other trade
agreements, tariffs, treaties or policies, as well as the
uncertainty of obtaining and maintaining effective antidumping and
countervailing duty orders to counteract the harmful effects of
unfairly traded imports; impacts of existing and increasing
governmental regulation, including potential environmental
regulations relating to climate change and carbon emissions, and
related costs and liabilities, including failure to receive or
maintain required operating and environmental permits, approvals,
modifications or other authorizations of, or from, any governmental
or regulatory authority and costs related to implementing
improvements to ensure compliance with regulatory changes,
including potential financial assurance requirements; potential
impacts to the environment or exposure to hazardous substances
resulting from our operations; our ability to maintain adequate
liquidity, our level of indebtedness and the availability of
capital could limit our financial flexibility and cash flow
necessary to fund working capital, planned capital expenditures,
acquisitions, and other general corporate purposes or ongoing needs
of our business; our ability to reduce our indebtedness or return
capital to shareholders within the currently expected timeframes or
at all; adverse changes in credit ratings, interest rates, foreign
currency rates and tax laws, including adverse impacts as a result
of the Inflation Reduction Act of 2022; the outcome of, and costs
incurred in connection with, lawsuits, claims, arbitrations or
governmental proceedings relating to commercial and business
disputes, environmental matters, government investigations,
occupational or personal injury claims, property damage, labor and
employment matters, or suits involving legacy operations and other
matters; uncertain cost or availability of critical manufacturing
equipment and spare parts; supply chain disruptions or changes in
the cost, quality or availability of energy sources, including
electricity, natural gas and diesel fuel, or critical raw materials
and supplies, including iron ore, industrial gases, graphite
electrodes, scrap metal, chrome, zinc, coke and metallurgical coal;
problems or disruptions associated with transporting products to
our customers, moving manufacturing inputs or products internally
among our facilities, or suppliers transporting raw materials to
us; uncertainties associated with natural or human-caused
disasters, adverse weather conditions, unanticipated geological
conditions, critical equipment failures, infectious disease
outbreaks, tailings dam failures and other unexpected events;
cybersecurity incidents relating to, disruptions in, or failures
of, information technology systems that are managed by us or third
parties that host or have access to our data or systems, including
the loss, theft or corruption of sensitive or essential business or
personal information and the inability to access or control
systems; liabilities and costs arising in connection with any
business decisions to temporarily or indefinitely idle or
permanently close an operating facility or mine, which could
adversely impact the carrying value of associated assets and give
rise to impairment charges or closure and reclamation obligations,
as well as uncertainties associated with restarting any previously
idled operating facility or mine; our ability to realize the
anticipated synergies and benefits of our recent acquisition
transactions and to successfully integrate the acquired businesses
into our existing businesses, including uncertainties associated
with maintaining relationships with customers, vendors and
employees and known and unknown liabilities we assumed in
connection with the acquisitions; our level of self-insurance and
our ability to obtain sufficient third-party insurance to
adequately cover potential adverse events and business risks;
challenges to maintaining our social license to operate with our
stakeholders, including the impacts of our operations on local
communities, reputational impacts of operating in a
carbon-intensive industry that produces greenhouse gas emissions,
and our ability to foster a consistent operational and safety track
record; our ability to successfully identify and consummate any
strategic capital investments or development projects,
cost-effectively achieve planned production rates or levels, and
diversify our product mix and add new customers; our actual
economic mineral reserves or reductions in current mineral reserve
estimates, and any title defect or loss of any lease, license,
easement or other possessory interest for any mining property;
availability of workers to fill critical operational positions and
potential labor shortages caused by the ongoing COVID-19 pandemic
or otherwise, as well as our ability to attract, hire, develop and
retain key personnel; our ability to maintain satisfactory labor
relations with unions and employees; unanticipated or higher costs
associated with pension and OPEB obligations resulting from changes
in the value of plan assets or contribution increases required for
unfunded obligations; the amount and timing of any repurchases of
our common shares; and potential significant deficiencies or
material weaknesses in our internal control over financial
reporting.
For additional factors affecting the business of Cliffs, refer
to Part I – Item 1A. Risk Factors of our Annual Report on Form 10-K
for the year ended December 31, 2021, and other filings with the
SEC.
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version on businesswire.com: https://www.businesswire.com/news/home/20221222005137/en/
MEDIA CONTACT: Patricia Persico Senior Director,
Corporate Communications (216) 694-5316 INVESTOR CONTACT:
James Kerr Manager, Investor Relations (216) 694-7719
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