USA:  August 19, 2025:  Cleveland-Cliffs and Carmakers Embrace Multi-Year, Fixed-Price Contracts

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Details are lacking but this much is known: Cleveland-Cliffs is intent on rewriting the way steel suppliers deal with their automotive customers. First reported by Bloomberg and since by several other business media outlets, Cliffs is determined to break the traditional annual contract song-and-dance between the mills and Motown.

“The agreements, which run two to three years, cover industry-standard sheet steel and mark a sharp shift from Cliffs’ usual one-year contracts, according to people familiar with the matter,” writes CBT News, an automotive dealer publication. “Terms of the deals, including pricing, were not disclosed,” the outlet added.

Cliffs is not commenting at all on the matter, so it’s assumed the automotive publications have their own car manufacturing sources.

Bloomberg first reported over the weekend that Cliffs signed a multi-year supply contract with GM, but other automotive manufacturers have also been reported to have since inked deals of varying duration. Cliffs has certainly counted all major carmakers among its customers in recent years (including GM, Ford, Stellantis, Toyota), as well as other OEMs serving the automotive market. Cliffs has been named ‘Supplier of the Year’ by General Motors several times in recent years.

CBT wrote: “The unprecedented steel contracts highlight how automakers and suppliers alike are hedging against prolonged tariff pressures that could reshape pricing and competition across the U.S. auto industry.”

WSD Take:

While Cliffs is not providing any details (and neither confirming nor denying the widely reported news) few in the steel industry should be surprised. There has been a steady drum beat from Cleveland-Cliffs signaling its belief that the annual contract give-and-take between steel suppliers and their automotive customers is a relic of days gone by.

And the company’s multi-year fixed contract approach — which WSD believes is rooted in securing higher fixed volumes for the steelmaker, as well as supply and locked-in price certainty for its automotive customers — is potentially a major steel industry game-changer.

CEO Lourenco Goncalves more than hinted during the company’s Q1 conference call with analysts that transformation was at hand. On that May 8 call, he said Cliffs had gained back market share from its key automotive OEM accounts. “At this point, it is very clear through our order book as well as a consequence of recently extended contracts with our well established clients that profound changes are coming,” Goncalves said.

At the same time, it was also implied that the current trade and tariff environment would be the stimulus for Cliffs to secure higher fixed volumes of steel shipped to automotive clients. Cliffs is on record as fully expecting an automotive resurgence in the United States and now appears to be actively helping that effort by giving car manufacturers greater

steel supply-and-cost certainty over an extended period. WSD has no reason to doubt that anti-inflationary, locked-in prices with carmakers have been negotiated or will be agreed to soon.

On the same May 8 call, Goncalves expressed excitement “with the new opportunities in delivering more steel to the car manufacturers here in the United States,” even if total vehicle sales are weaker—because more cars will be made in the US and far fewer imported.

“Let’s put numbers on that,” he explained, “16 million cars sold, let’s call 8 million cars produced here and 8 million cars imported from somewhere. If the number goes from 8 million to 12 million, for the car manufacturers it’s a reduction from 16 million to 12 million in cars sold. For us suppliers of steel, particularly Cliffs, it’s an increase of 50% from 8 million cars to 12 million cars. And that’s what I’m preparing my company for. This will happen, and I’m being very conservative in my numbers. We are preparing Cleveland-Cliffs to be by far the biggest beneficiary of the increasing production of cars in the United States because we are a well-established producer of steel for the automotive industry.”

Other points:

• Cliffs has reported it is gaining back market share from its automotive core. Recently, as reported in its 10K filings, its direct steel sales to automotive have diminished as a percent of total revenue. But this can be largely attributed to the 2024 acquisition of Stelco which produces about 2 million tons of hot-rolled band that is not sold into the automotive sector. At the end of Q1 2025, Cliffs’ share of direct sales to automotive markets represented 29% of total steel revenues. That was down from 32% in Q1 2024 and 36.5% in Q1 2023. What’s more, in Cliffs’ second quarter 2025, $1.2 billion of total steel revenues of $4.8 billion, or 26%, were direct sales to the automotive market. Q2 2025 steel product sales volumes of 4.3 million net tons consisted of 40% hot rolled, 27% coated, 15% cold-rolled, 5% plate, 3% stainless and electrical, and 10% other, including slabs and rail.
• The supply of slabs to ArcelorMittal Calvert, as reported, will end on December 9, 2025, a decision initiated by Cliffs and described by the company on earnings call as “onerous.” Typically, the qualification process for advanced grades of automotive steels could be upwards of 18+ months.

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