Q2 Revenues Gain at Cliffs Despite Fewer Shipments, Loss Narrows
Citing a robust US market for flat-rolled steel and higher prices, Cleveland-Cliffs early Thursday reported second-quarter revenues of $5.2 billion, a $300 million increase from Q1. Steel shipments were down slightly from Q1 because of maintenance outages, according to the company, but a roughly 300,000 ton increase in shipments is expected from Q2 to Q3.
Cliffs reported that its Q2 net loss of $134 million narrowed from Q1’s net loss of $229 million. Adjusted EBITDA in the second quarter was $286 million, a $191 million increase from the prior quarter.
“The domestic market remains strong as ongoing global tensions continue to underscore the importance of having a thriving domestic steel industry,” Cliffs’ Chairman and CEO, Lourenco Goncalves, said. Of note: Lourenco Goncalves has relinquished the title of President—because Cleveland-Cliffs also Thursday announced that its Board of Directors has promoted his son, Executive Vice President and Chief Financial Officer Celso Goncalves to serve as President and CFO.
“Demand continues to improve, imports remain subdued, and lead times are extending further,” the elder Goncalves said. “Our automotive volumes remained strong during the quarter and will increase further in Q3, helping to further absorb fixed costs as our finishing lines operate at higher utilization rates.”
Second-quarter 2026 steel product sales volumes of 4.0 million net tons consisted of 45% hot-rolled, 31% coated, 15% cold-rolled, 4% plate, 4% stainless and electrical, and 1% other. Cliffs said its steel revenues of $5.1 billion included $1.6 billion, or 33%, of sales to the distributors and converters market; $1.5 billion, or 29%, of direct sales to the automotive market; $1.4 billion, or 28%, of sales to the infrastructure and manufacturing market; and $526 million, or 10%, of sales to steel producers.
Goncalves also noted that the company is starting to see “meaningful improvement in the Canadian market, positioning Stelco to return to generating significant earnings.”
The CEO said: “The second quarter marked another step in returning to the earnings power this company is capable of and has demonstrated in the past. Even with extended maintenance outages in April and May, our second quarter adjusted EBITDA tripled from the Q1 level and Q3 adjusted EBITDA is expected to more than double Q2.” He said that as expected, the company returned to positive free cash flow during Q2 and has begun reducing its debt — a trend that will continue.
Goncalves now sees Cliffs’ H2 2026 as its strongest in five years. “Looking ahead, we have clear visibility into the continuous earnings improvement that began during the first half of the year,” he noted. “With average selling prices, volumes, and costs all moving in the right direction, our second-half earnings performance should be our strongest since 2021 as Q4 EBITDA is currently expected to even further exceed our Q3 guidance.”
The CEO said Cliffs is seen finishing the year on a positive note and entering 2027 with considerable momentum and more opportunities for upside. These included the higher reset of fixed price contracts and much improved profits in Canada, according to Goncalves. “With where our outlook stands today, we would expect to reach our leverage target of under 2.5x debt to EBITDA by this time next year,” he said.
Looking ahead, the company expects third-quarter 2026 adjusted EBITDA to be approximately $575 million. Other previous guidance expectations for full-year 2026 were maintained, including:
• Steel shipment volumes at approximately 16.5-17.0 million net tons
• Capital expenditures at approximately $700 million
• Selling, general and administrative expenses at approximately $575 million
• Depreciation, depletion and amortization at approximately $1.1 billion
• Cash Pension and OPEB payments and contributions at approximately $125 million
Regarding his son being named president, Lourenco Goncalves, said in a statement: “To those following Cliffs for a long time, this appointment should come as no surprise. In his 10 years here, Celso has earned the trust and respect of our Board, our management team, our employees, and our investors through his unwavering commitment to Cleveland Cliffs.” He described Celso’s elevation to president and his appointment to the Board as “natural progressions that recognize both his outstanding performance and his increasing leadership responsibilities across the enterprise.”
The elder Goncalves mentioned that the appointment represents the beginning of a “thoughtful and deliberate leadership transition toward the future of Cleveland-Cliffs.”
And just to be perfectly clear, he added: “I remain fully committed to leading this Company for years to come. I will continue to drive our strategy and guide Cleveland-Cliffs through our next phase of delivering stronger and more sustainable results. Celso’s expanded role positions us exceptionally well for the future, ensuring continuity in the execution of the disciplined strategy that has transformed Cleveland-Cliffs into the industry leader it is today.”