Cleveland-Cliffs Inc. (CLF): 5 FORCES Analysis [Nov-2025 Updated]

You're looking for the real picture on Cleveland-Cliffs Inc. (CLF) heading into 2026, and honestly, the landscape is a study in contrasts. On one hand, their vertical integration and multi-year contracts with auto giants-covering 30% of Q3 2025 revenue and running out to 2027 or 2028-act like a solid moat against suppliers and new entrants. But, that protection isn't printing money; the competitive rivalry is clearly biting, evidenced by a tight Q3 2025 Adjusted EBITDA of just $143 million and a net selling price hovering around $1,132 per ton. So, how do these five forces-from the threat of substitutes like Grain-Oriented Electrical Steel (GOES) to the high barriers to entry from massive capital expenditures-really stack up right now? Dive in below for the full, unvarnished breakdown of where the pressure points truly lie for Cleveland-Cliffs Inc.

Cleveland-Cliffs Inc. (CLF) - Porter's Five Forces: Bargaining power of suppliers

When you look at Cleveland-Cliffs Inc. (CLF), the power held by its suppliers is significantly tempered by the company's own structure. Honestly, the biggest lever Cleveland-Cliffs has against commodity suppliers is its own operation.

Vertical integration from iron ore to steel minimizes reliance on external commodity suppliers. Cleveland-Cliffs is North America's largest manufacturer of iron ore pellets, meaning a substantial portion of its primary raw material is sourced internally, not purchased on the open market. This integration spans from mined raw materials, direct reduced iron, and ferrous scrap through primary steelmaking and downstream finishing. This internal control over the most basic input naturally keeps the bargaining power of external iron ore suppliers low.

However, for necessary inputs like coke, Cleveland-Cliffs must rely on external partners, but they have locked in favorable terms. Secured a three-year extension with SunCoke Energy for 500,000 tons of coke annually. This new agreement is set to begin on January 1, 2026, and maintains key provisions similar to prior contracts, which helps stabilize a crucial cost component for their blast furnaces.

The labor market, a critical supplier of human capital, also presents a manageable situation for now. Strong, stable labor relations with the United Steelworkers (USW) union reduce labor disruption risk. The master contract covering approximately 12,000 USW-represented employees at 13 operating locations was ratified in October 2022 and remains valid through September of 2026. This stability is underpinned by Cleveland-Cliffs' commitment to invest $4 billion in these USW-represented facilities over the contract term.

Furthermore, the company is actively consuming excess pellet inventory built up in 2024. To re-balance working capital and draw down this inventory, Cleveland-Cliffs took action in 2025 by idling its Minorca iron ore mine, which has an annual capacity of 3mn long tons, and cutting production at the Hibbing Taconite mine, which has a capacity of 7mn lt. This internal inventory management reduces the immediate need to engage with external pellet suppliers.

Here's a quick look at how key inputs are structured, which helps you see where supplier power is concentrated:

The company's Q2 2025 Adjusted EBITDA was $97 million, showing that cost control, including input management, is vital to profitability. Defintely, the internal control over iron ore and the long-term coke agreement are key defenses against supplier leverage.

Finance: draft 13-week cash view by Friday.

Cleveland-Cliffs Inc. (CLF) - Porter's Five Forces: Bargaining power of customers

When looking at Cleveland-Cliffs Inc. (CLF)'s customer power, you see a dynamic where some major buyers have locked-in pricing, but the company's specialization in high-value products creates friction for others looking to switch away. Let's break down the numbers from the third quarter of 2025 to see where the pressure points are.

The automotive segment is a huge piece of the pie, which means those Original Equipment Manufacturers (OEMs) carry significant weight. For Q3 2025, direct sales to the automotive market accounted for 30% of the total steelmaking revenue. That translated to $1.4 billion of the $4.6 billion in steelmaking revenue reported for the quarter. This concentration means that while the relationship is deep, the customer base is highly concentrated, giving those top-tier auto buyers leverage in overall volume negotiations.

However, that leverage is currently constrained by contract structure. You should note that Cleveland-Cliffs Inc. secured new, multi-year agreements with all major automotive OEMs. These agreements lock in higher sales volumes and favorable pricing that run through 2027 or 2028. This effectively caps the short-term ability of these major customers to demand immediate price concessions, as they are committed to the current terms for the next few years.

The next largest customer group, the distributors and converters market, presents a different kind of pressure. This segment represented 28% of Q3 sales, equating to $1.3 billion of the steelmaking revenue. Customers in this channel are generally more price-sensitive because they are sourcing various steel types to fabricate for their own end-users, meaning they are more likely to shop around for the best spot price if they aren't locked into a long-term deal with Cleveland-Cliffs Inc.

To counter this, Cleveland-Cliffs Inc.'s focus on specialized, high-end products limits the switching options for many customers. They are not just selling commodity steel; they are deeply embedded in critical supply chains. For instance, the company supplies sophisticated grades of Advanced High-Strength Steel (AHSS) and a full range of electrical steel for electric vehicle (EV) motors. This specialization creates high switching costs, especially when you consider the recent success in demonstrating that their steel can replace aluminum in OEM stamping equipment without requiring costly retooling.

Here's a quick look at the revenue distribution from Q3 2025 steelmaking sales, which shows the relative size of the customer segments:

Furthermore, the high-value nature of some of these specialized products is underscored by strategic contracts. You can see this with the five-year, $400 million fixed-price contract awarded by the U.S. Defense Logistics Agency for grain-oriented electrical steel (GOES), which is a critical component for the electrical grid. This type of contract demonstrates inelastic demand for their most technically demanding products.

The power dynamic is therefore split:

• Major auto OEMs have secured pricing stability until 2027 or 2028.
• The Distributors and Converters channel, at 28% of revenue, remains more price-sensitive.
• Specialty products like electrical steel limit switching due to high technical barriers.
• Cleveland-Cliffs Inc. secured a $400 million GOES contract with the DLA.

Finance: draft 13-week cash view by Friday.

Cleveland-Cliffs Inc. (CLF) - Porter's Five Forces: Competitive rivalry

You're looking at the competitive rivalry for Cleveland-Cliffs Inc. (CLF) right now, and honestly, it's a battleground defined by domestic giants and global trade policy. The rivalry with domestic majors like Nucor and U.S. Steel for market share is defintely intense. While Cleveland-Cliffs Inc. secured multi-year agreements with all major automotive OEMs, ensuring a steady demand base, this success comes against competitors who also vie for that high-value automotive steel business. The operational differences are key here; for instance, competitors like Nucor and Steel Dynamics utilize more flexible electric arc mini-mills, which can handle cyclical swings better than older technologies used by some rivals. Still, the overall environment is one where domestic mills are fighting for every ton.

Global overcapacity and import pressure still exist despite tariffs, which is a constant headwind. Company executives pointed to the ongoing impact of the 50% Trump-era steel tariffs as a driver for revenue growth, which helped support U.S. steel prices. However, the Canadian operations, which represent about 9% of total sales, continue to underperform due to approximately 65% imported steel penetration in Canada, highlighting where import pressure remains significant despite U.S. protection.

The tight operating margins are clear when you look at the bottom line from the third quarter of 2025. Cleveland-Cliffs Inc. posted an Adjusted EBITDA of only $143 million for Q3 2025, which, while an improvement of 52% sequentially from the prior quarter's $94 million, still shows the pressure on profitability in this commodity-driven space. This suggests that even with strategic wins, the operating leverage is thin.

This commodity-like element is further indicated by the pricing structure. The Q3 average net selling price was $1,032 per net ton. While this was an improvement of $17 per net ton over the prior quarter, driven by a richer sales mix where automotive shipments moved to 30% of steelmaking revenue, the price point itself reflects the underlying market's sensitivity to global supply and demand fluctuations.

Here's a quick look at the key Q3 2025 operational and financial snapshot that frames this rivalry:

The competitive dynamics are also visible in how Cleveland-Cliffs Inc. is managing its portfolio against these rivals:

• Secured multi-year agreements with all major automotive OEMs through 2027-2028.
• Achieved 30% of steelmaking revenue from the automotive sector in Q3 2025.
• Canadian operations are weighed down by high import penetration (approx. 65%).
• Announced expected annual savings of $300 million from operational footprint optimization.
• Full-year SG&A expectation for 2025 was reduced to $550 million.

The company is also actively seeking to diversify away from pure commodity exposure, evidenced by securing a $400 million, five-year Defense Logistics Agency contract for electrical steel and exploring rare-earth mineral production. Finance: draft 13-week cash view by Friday.

Cleveland-Cliffs Inc. (CLF) - Porter's Five Forces: Threat of substitutes

You're analyzing the competitive landscape for Cleveland-Cliffs Inc. (CLF) and need to assess how easily customers can switch to alternatives for their steel products. The threat of substitutes is a major factor, especially in the automotive sector where material choices are constantly debated.

For high-end, specialized products like Grain-Oriented Electrical Steel (GOES), the threat of substitution is generally low because the required performance characteristics are hard to match. While specific GOES data isn't isolated, Cleveland-Cliffs Inc.'s combined stainless and electrical product segment represented 4% of its total steel product sales volumes in the third quarter of 2025, indicating a niche, specialized offering. This focus on value-added products helps insulate a portion of Cleveland-Cliffs Inc.'s business from broad commodity price swings.

The dynamic between steel and aluminum in the automotive sector is currently shifting in favor of steel, which is a clear opportunity for Cleveland-Cliffs Inc. Following a fire in September 2025 that disrupted shipments from Novelis' Oswego, N.Y., aluminum plant-a facility supplying about 40% of the aluminum sheet to the U.S. auto industry-CEO Lourenco Goncalves stated, We fully expect that aluminum participation in the automotive space will continue to shrink. This event has forced automakers to seriously consider switching back to steel for certain models, especially those that had previously moved toward aluminum for lightweighting.

Cleveland-Cliffs Inc. is actively broadening its specialized portfolio to capitalize on this trend. The company completed its $150 million capital investment in a new Vertical Stainless Bright Anneal Line at its Coshocton Works facility in June 2025. This new line is designed to supply premium stainless steel for high-end automotive and critical appliance applications, enhancing the company's offering in areas where quality and domestic supply chain resilience are paramount.

Steel remains fundamentally essential for core infrastructure and construction applications, providing a stable demand base. Looking at Cleveland-Cliffs Inc.'s third-quarter 2025 performance, sales to the infrastructure and manufacturing market accounted for $1.3 billion, or 29%, of its total steelmaking revenues of $4.7 billion. This is comparable to the 31% share that infrastructure and manufacturing represented in the second quarter of 2025.

To put the competitive material landscape in context, here is a snapshot of the relevant market sizes and cost differentials as of 2025:

The cost differential is a persistent factor favoring steel, as benchmark steel is priced at 39 cents a pound, while aluminum is nearly three times that amount at $1.10 per pound. Furthermore, while aluminum can offer up to a 50% weight reduction compared to traditional steel, Advanced High-Strength Steels (AHSS) allow for significant weight savings over conventional steel, often achieving over 25% weight savings compared to conventional steel alone, while maintaining strength and safety.

Cleveland-Cliffs Inc. (CLF) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry for new steel producers in the US market as of late 2025, and honestly, the hurdles are immense. The sheer scale of investment needed to compete with established players like Cleveland-Cliffs Inc. is the first, and perhaps largest, wall.

Vertical integration requires massive, prohibitive capital investment to replicate. Building a modern Electric Arc Furnace (EAF) mini-mill, which is the lower-cost entry point today, still demands a capital outlay of at least $300 million. For a 1.5 million-ton-per-year EAF facility, you're looking at a range of $450 million to $750 million. If a new entrant tried to replicate a traditional, fully integrated mill relying on iron ore and coke, the costs skyrocket. A comparable integrated facility could easily exceed $2 billion, with costs estimated at $1,500-$2,000 per ton of annual capacity. To put that in perspective for a major operation, a 5 million-ton-per-year integrated plant could hit $10 billion.

Here's a quick look at what that initial capital commitment looks like across technology choices:

US trade policy, with tariffs up to 50%, severely limits foreign market entry. Since June 4, 2025, the US has set Section 232 tariffs on most steel imports at 50% ad valorem. This is up from the previous 25% rate. This high levy makes it incredibly difficult for foreign producers to undercut domestic pricing unless they are willing to absorb a massive cost, or unless they originate from the UK, which remains subject to a 25% tariff.

New capacity takes years; competitors are targeting 2028 or 2029 for new plants. The lead time for major capacity additions is measured in years, not months. For example, the modernization plan for U.S. Steel, backed by Nippon Steel, targets completing its investments by the end of 2028. Furthermore, even in the emerging green steel sector, commercial-scale facilities are projected to hit full production capacity in 2026-2027, with production costs reaching parity with traditional methods not until 2028-2029. This long gestation period means existing players have significant time to adjust strategy.

The lowered 2025 Capital Expenditures guidance of $525 million still represents a huge barrier. While Cleveland-Cliffs Inc. has trimmed its spending plans for the year, the required investment is still substantial. The latest guidance for 2025 Capital Expenditures stands at $525 million, down from an earlier projection of $625 million and $700 million. This ongoing, multi-hundred-million-dollar commitment to maintenance, modernization, and decarbonization projects by incumbents like Cleveland-Cliffs Inc. demonstrates the high level of sustained capital required just to stay competitive, let alone enter the market.

The barriers to entry are clearly defined:

• Massive upfront capital for integrated facilities, easily exceeding $2 billion.
• Tariffs on foreign steel imports are currently set at 50%.
• Major competitor upgrades are scheduled for completion by 2028.
• Cleveland-Cliffs Inc.'s 2025 CapEx guidance is $525 million.