July 22, 2025

Different Takes on Steel Tariffs Reflected in Cliffs, SDI Q2 Earnings

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Steel tariffs helped boost shipment volumes in the second quarter at Cleveland-Cliffs, leading to higher realized pricing. On Monday, Cliffs reported record steel shipments of 4.3 million net tons and revenues of $4.9 billion in Q2. The average selling price during the quarter was $1,015 per net ton.

Early Tuesday, SDI reported steel shipments of 3.3 million tons, net sales of $4.6 billion during Q2, and average realized pricing of $1,134/ton, but acknowledged customer “hesitancy” stemming from tariff concerns for the company’s lower shipments. SDI’s flat-rolled shipments totaled 1.95 million tons in Q2 2025, up slightly from the same period a year ago, but down about 7% sequentially from 2.1 million tons in Q1 2025.

“The uncertainty regarding trade policy continues to cause hesitancy in customer order patterns across our businesses, despite healthy underlying demand factors, such as manufacturing onshoring, infrastructure program funding, and increased regionalization of supply chains in the U.S.,” said SDI Chairman and CEO Mark Millett. “This hesitancy, combined with an inventory overhang of coated flat rolled steel, resulted in lower steel and steel fabrication shipments in the second quarter 2025.” 

He added that SDI strongly believes that “as individual country trade agreements are negotiated and trade policy is generally stabilized in the coming months, strong pent-up demand for our products will result.” 

Cliffs CEO Lourenco Goncalves said on the company’s earnings call: “The import data that has been published thus far makes it very clear that the 232 tariffs are having a positive impact not just on steel but also on the automotive sector. Both flat-rolled steel imports and light vehicle imports hit multiyear lows in April.”

He added: “The Trump administration has prioritized two sectors, steel and automotive, that are critical to the strength of our economy, to the resilience of our supply chains, and to United States’ national security. Cliffs sits right there at the intersection of both sectors, steel and automotive.” Domestic steel pricing remains strong, the CEO said.

“Average selling price of $1,015 per ton represented a $35 per ton increase from the prior quarter, driven primarily by higher index pricing and partially offset by lower slab and plate pricing,” said CFO Celso Goncalves on the company’s earnings call with analysts. “Stelco pricing was relatively flat.” He added, in response to a price indexing question, that 5% of Cliffs’ total volume is on a “CRU quarter lag,” which would amount to 215,000 tons of the 4.3 million external tons shipped. 

CFO Goncalves was asked about the pricing outlook and noted that Cliffs expects to see continued EBITDA improvement from Q2 to Q3. “I want to make that very clear,” he said on the call, emphasizing that shipments should be similar in Q3 as they were in Q2 at that 4.3-million-ton level. “As it relates to average selling price, I think we kind of give you guys the calculus to be able to get to that number,” he explained, continuing, “But just to sort of reiterate how the composition works, if you want to take all the pieces and calculate your own ASP from Q2 to Q3, you can do the math. It’s about one-third fixed on a full-year price with resets throughout the year, and then about 20% of our volumes are under CRU month lags. Call it 8% is the slab agreement on a two-month lag; 5% is CRU with a quarter lag, and about a third is the remainder kind of spot, and that includes the Stelco volumes, as well. So, I think with that, you should get enough to calculate Q3.”

We remain confident that market factors are in place to support strong domestic steel and aluminum product consumption in the coming years, as the uncertainty concerning trade and tax policies is mitigated and the interest rate environment improves,” continued Millett, turning to SDI’s outlook. “As unfairly traded imports decline, uncertainty dissipates, and growth of manufacturing continues to increase in the U.S., we believe a strong market environment will emerge, supporting pricing and demand.” Millett added that SDI views the U.S. International Trade Commission’s preliminary determinations on coated flat rolled steel “as a significant positive development.” He said: “A reduction in unfairly traded imports of these products would be a meaningful tailwind for us, as we are the largest non-automotive flat rolled steel coater in the United States. We expect to receive final determinations before the end of the third quarter 2025.”