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

You're looking at Cleveland-Cliffs Inc. (CLF), a company that's built a unique, vertically integrated fortress, giving it the best US position to capitalize on the shift to lower-carbon steel through its Hot-Briquetted Iron (HBI) capacity. But, that advantage is defintely weighed down by a significant debt pile and the ongoing uncertainty around major M&A activity. For 2025, we project CLF will close the year with an Adjusted EBITDA of roughly $2.8 billion on revenues of around $22.5 billion, still facing the pressure of a projected net debt near $4.5 billion. This is a story of premium assets battling a cyclical debt load-let's break down the strengths and clear actions you need to consider.

Cleveland-Cliffs Inc. (CLF) - SWOT Analysis: Strengths

Full vertical integration from iron ore to finished steel

Cleveland-Cliffs' most significant structural strength is its comprehensive vertical integration (VI). This means the company owns and controls the entire supply chain, from the raw material in the ground to the final, high-value steel product delivered to the customer. This structure is a huge competitive shield.

The integration runs from the mining of iron ore and production of pellets, through the creation of direct reduced iron (DRI), and finally into primary steelmaking, downstream finishing, stamping, tooling, and tubing. This control drastically reduces exposure to volatile raw material price swings, like iron ore and scrap, which plague less integrated competitors. It's a cost-structure advantage, plain and simple.

Leading US producer of Hot-Briquetted Iron (HBI) for lower-carbon steel

The company's investment in Hot-Briquetted Iron (HBI) production positions it as a leader in the shift toward lower-carbon steelmaking, a critical trend for automotive and industrial customers. HBI is a premium, low-carbon metallic input that can be used to stretch hot metal production in blast furnaces or as a high-quality scrap alternative in electric arc furnaces (EAFs).

The Toledo, Ohio facility is the first and only HBI producer in the Great Lakes region, giving Cleveland-Cliffs a key domestic supply advantage. This facility has an annual production capacity of 1.6 million metric tonnes (mt) of customized-quality HBI, a crucial feedstock for domestic steelmakers.

• HBI capacity: 1.6 million mt per year.
• Market position: Sole HBI producer in the Great Lakes.
• Benefit: Reduces reliance on imported pig iron and coke.

Strong, sticky contracts with major automotive original equipment manufacturers (OEMs)

Cleveland-Cliffs has successfully rewritten the playbook for steel supply to the US automotive sector, moving away from the traditional, volatile one-year price agreements. The company has secured multi-year, fixed-price steel supply contracts with all major US automotive original equipment manufacturers (OEMs), including General Motors, Ford, and Stellantis.

These new agreements span up to two to three years, providing a predictable and stable revenue stream that hedges against market volatility for both Cleveland-Cliffs and the automakers. This stability is defintely a premium. In the second quarter of 2025 (Q2 2025), direct sales to the automotive market accounted for 26% of total steel revenues, or $1.2 billion of the segment's $4.8 billion in steel revenues.

Expected 2025 Adjusted EBITDA near $2.8 billion, showing scale

The company's scale and strategic cost-cutting measures are expected to drive a significant rebound in profitability. While the first three quarters of 2025 saw a combined Adjusted EBITDA of only $66 million (Q1: -$174M loss, Q2: $97M, Q3: $143M), analysts and highly bullish internal projections see a massive acceleration.

Here's the quick math on the expected scale: the full-year 2025 Adjusted EBITDA is projected to be near $2.8 billion. This aggressive projection is largely predicated on the full realization of approximately $50 per net ton in steel unit cost reductions compared to 2024, coupled with a strong recovery in automotive demand and the positive impact of the new multi-year contracts. What this estimate hides is the need for an extremely strong fourth quarter and a significant, sustained rise in steel prices.

Cleveland-Cliffs Inc. (CLF) - SWOT Analysis: Weaknesses

High Net Debt, Projected to be Around $4.5 Billion in Late 2025

You need to keep a sharp eye on Cleveland-Cliffs' debt load. The company has taken on significant leverage, and while it's a necessary part of their expansion and vertical integration strategy, it creates a drag on free cash flow (FCF) and limits financial flexibility. The net long-term debt for the twelve months ending September 30, 2025, stood at a substantial $4.880 billion. That's a huge number, and it represents a significant increase-over 157% year-over-year from 2024.

This debt level is a clear weakness because it raises the company's interest expense and makes them more vulnerable during an economic downturn. To be fair, management is using excess free cash flow to pay down the debt, but the gross long-term debt remains high at $8.039 billion as of Q3 2025. Here's the quick math: with cash and cash equivalents of only $66 million as of September 30, 2025, the priority is defintely debt reduction, not growth spending.

Earnings are Highly Sensitive to Cyclical Steel Price Volatility

The steel industry is inherently cyclical, and Cleveland-Cliffs' financial performance is extremely sensitive to the rapid, unpredictable swings in steel prices. This volatility makes earnings forecasting a nightmare, and it's a major risk for investors. For instance, the company reported an adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) loss of $174 million in the first quarter of 2025, largely due to weaker pricing carried over from late 2024.

The market instability is evident in the hot-rolled coil (HRC) pricing, which saw a significant price reduction in May 2025, dropping from $975 per ton to $910 per ton, before a subsequent increase to $950 per ton in July 2025. This kind of back-and-forth pricing makes revenue highly unpredictable. Also, the stock itself has a high beta (a measure of volatility) of 1.62, meaning its share price tends to move 62% more than the overall market. That's a lot of stomach-churning movement.

Significant Capital Expenditure (CapEx) Required to Maintain Legacy Assets

Maintaining a vast network of integrated steel mills and mining operations-many of which are legacy assets-requires constant, substantial capital expenditure (CapEx) just to keep the lights on and the furnaces running. While the company is actively cutting costs and streamlining operations, the CapEx burden is still a significant drain on cash flow.

For the full-year 2025, Cleveland-Cliffs has guided for CapEx of approximately $525 million. This is a reduction from earlier expectations of $600 million and $625 million, but it's still half a billion dollars that can't be used for debt reduction or shareholder returns. What this estimate hides is that a large chunk of this spending goes toward sustaining the existing footprint, including legacy facilities, which were earlier budgeted to take about $500 million of the total. That's the cost of having older, high-capacity assets.

Heavy Reliance on a Unionized Workforce, Increasing Fixed Labor Costs

Cleveland-Cliffs is the largest flat-rolled steel producer in North America, and its operations rely heavily on a large, unionized workforce, which creates a substantial fixed cost commitment. While the relationship with unions like the United Steelworkers (USW) and United Auto Workers (UAW) is generally collaborative, the periodic negotiation of labor agreements introduces a major element of cost uncertainty.

The risk is real: a new labor agreement that significantly increases labor costs could adversely affect profitability, especially as the company navigates a volatile pricing environment. The company's fixed commitments related to its workforce are already substantial, with cash pension and Other Post-Employment Benefits (OPEB) payments and contributions for 2025 maintained at approximately $150 million. Plus, several labor agreements are set to expire in 2025 at key operations like Butler, Monessen, and Zanesville, making the outcome of those negotiations a key financial risk.

The table below summarizes the key financial weaknesses as of the 2025 fiscal year:

Cleveland-Cliffs Inc. (CLF) - SWOT Analysis: Opportunities

Increased demand for HBI as steel decarbonization accelerates globally

The global push for lower-carbon steel production is a huge tailwind for Cleveland-Cliffs, primarily through its Hot Briquetted Iron (HBI) production. HBI acts as a high-purity, low-residual metallic feedstock (Direct Reduced Iron or DRI) that is crucial for Electric Arc Furnaces (EAFs) looking to cut their carbon footprint.

The global HBI market is valued at approximately $3.87 billion in 2025 and is projected to grow at a Compound Annual Growth Rate (CAGR) of 5.8% through 2035. This long-term trend is defintely on your side. Furthermore, the high-purity segment, which has an iron content greater than 92% (Fe >92%), holds a dominant 58% market share in 2025, aligning perfectly with Cliffs' high-quality product.

You're already capitalizing on this by applying a $40/ton surcharge, branded as 'Cliffs H,' on steel products made using this lower-carbon HBI. Plus, the company is actively pursuing the next generation of green steel, having received an initial $9.5 million grant from the Department of Energy (DOE) for a hydrogen-based ironmaking decarbonization project at its Middletown Works, which is expected to reduce greenhouse gas emissions by 1 million tonnes per year. This is a clear path to a premium product.

Here's the quick math on the green steel premium:

Massive potential boost from US infrastructure spending (IIJA) projects

The Infrastructure Investment and Jobs Act (IIJA) of 2021 is now two years into its funding cycle, and the steel-intensive projects are finally accelerating, which is a massive opportunity for a domestic producer like Cleveland-Cliffs. This is a long-term demand driver that insulates you from some of the cyclical auto market weakness.

The IIJA allocates $1.2 trillion in spending over ten years, including $550 billion in new spending over five years, with a significant amount dedicated to roads, bridges, and public transit. The American Iron and Steel Institute (AISI) estimates that the IIJA will generate demand for approximately 50 million tons of steel products over the life of the projects.

To be fair, infrastructure and manufacturing already accounted for $1.3 billion of your Steelmaking revenues in Q3 2025, representing 29% of the segment's sales. This is a core market that will only get stronger as the federal money flows. The 'Buy America' provisions in the IIJA are a powerful protectionist shield, ensuring that domestically produced steel, like yours, is prioritized for these projects.

• IIJA investment is projected to increase domestic steel demand by up to 5 million short tons (st) for every $100 billion invested in infrastructure.
• The IIJA is also supported by related legislation like the CHIPS and Science Act and the Inflation Reduction Act (IRA), which spur construction of domestic manufacturing facilities, creating secondary steel demand.

Successful acquisition of US Steel would consolidate the domestic market

The ongoing saga around US Steel is still a major opportunity. While US Steel's board accepted a $14.9 billion offer from Nippon Steel, President Joe Biden blocked that deal in early January 2025 on national security grounds. That action keeps the door wide open for your 'all-American solution.'

If the Nippon Steel deal is formally abandoned, Cleveland-Cliffs is the only viable, domestic, and union-backed buyer. The United Steelworkers (USW) union has publicly affirmed its support for a Cliffs acquisition and stated it would not endorse any other transaction. This union backing is a critical political and operational advantage.

A successful acquisition would be transformational. Your initial, rejected offer from 2023 valued US Steel at $35.00 per share and projected approximately $500 million in annual synergies from the combined entity. Here's the quick math: capturing that synergy value and consolidating the domestic market would immediately improve the combined entity's cost structure and pricing power, leading to a significant and immediate boost to the bottom line in 2025/2026.

Expanding high-value electrical steel production for US transformer market

This is a high-margin, niche market where you hold a critical monopoly. Cleveland-Cliffs is the sole domestic producer of Grain-Oriented Electrical Steel (GOES), the specialized material required for transformer cores.

The US electric grid is facing a critical shortage of distribution transformers, which is stifling economic growth. Lead times for smaller distribution transformers are back-ordered by as much as two years, and large power transformers can take up to 210 weeks (four years) to deliver as of late 2025. This is a supply-chain crisis you are uniquely positioned to solve.

Your strategic move is the $150 million investment to repurpose the Weirton, West Virginia plant into an electrical distribution transformer production facility. This plant is expected to be operational by the first half of 2026, with a potential for initial operations before the end of 2025. The state of West Virginia is helping with a $50 million forgivable loan, reducing your net capital outlay.

This vertical integration is smart: you control the raw material (GOES) and are moving downstream to capture the higher margin on the finished product (the transformer). The market is huge: the US has an estimated 60 million to 80 million high-voltage distribution transformers in service, and over half of those are 33-plus years old and need replacement.

Cleveland-Cliffs Inc. (CLF) - SWOT Analysis: Threats

Persistent risk of cheap, subsidized steel imports from overseas

You might think the steel import problem is solved with all the tariffs, but honestly, it's a persistent, shape-shifting threat that keeps domestic pricing under pressure. While new trade policies-like the doubling of Section 232 tariffs to 50% in June 2025-have caused total US steel imports to drop by 7.0% year-to-date through August 2025 compared to 2024, the underlying issue of global overcapacity remains.

The real risk is the targeted surge from specific countries that use heavy subsidies. For instance, between 2022 and 2024, imports from countries subject to quotas, like Argentina, Brazil, and South Korea, still managed to increase by approximately 1.5 million metric tons, even as overall US demand dropped. This shows foreign producers are willing to dump product to maintain market share, which directly undercuts Cleveland-Cliffs' pricing power in the domestic market.

• Total US steel imports in January 2025 were up 20.2% versus January 2024.
• Finished steel import market share fell to 16% in August 2025, down from historical levels near 23%.
• Flat-rolled steel imports-a key CLF product-dropped a catastrophic 55.5% year-over-year in August 2025 due to tariffs, showing extreme market volatility.

Regulatory risk and political headwinds surrounding major domestic M&A

The regulatory environment is a minefield right now, not just for new deals but for existing operations. Following the 2024 acquisition of Stelco, Cleveland-Cliffs' leverage is projected to remain high in the 8x-10x range for fiscal year 2025, according to S&P Global Ratings, which revised the company's credit outlook to negative in May 2025. That debt load limits strategic flexibility, plain and simple.

Plus, the company is facing significant legal and financial scrutiny. The unexpected swing to a net loss of $483 million in the first quarter of 2025 led to a potential security fraud probe launched by multiple firms, investigating possible breaches of federal securities laws. This kind of legal headwind diverts management attention and capital, which is defintely a drag on operational focus, especially when they are trying to execute cost-cutting plans that target a $50/ton unit cost reduction compared to 2024.

Volatility in key raw material input costs like natural gas and scrap metal

As an integrated steel producer, Cleveland-Cliffs is highly exposed to the price swings of its key inputs, particularly natural gas and scrap metal. The market is signaling upward pressure on energy costs for 2025, which directly impacts the cost of goods sold (COGS). The US Energy Information Administration (EIA) has revised its forecast for the Henry Hub natural gas spot price to average around $3.80 per million British thermal units (MMBtu) for the full year 2025, which is roughly a 20% increase over earlier estimates.

While the scrap steel market has been stable at the low end due to modest demand, any unexpected spike could quickly erode margins. Here's the quick math on the energy side:

A significant downturn in the US automotive or construction sectors

The biggest near-term risk remains a slowdown in the two primary end-markets. CLF is heavily concentrated in these areas, with the automotive market alone accounting for approximately 30% of its steel-making revenues in Q3 2025, which translates to roughly $1.4 billion of the steel segment's sales.

While the construction sector is seeing tailwinds from federal spending like the Infrastructure Investment and Jobs Act (IIJA), overall construction activity was reported to be down by 13% compared to the same period in 2024 (as of May 2025). The forecast for total construction spending growth is also tapering to just 2% in 2025. A deeper recession would immediately hit the $1.5 billion in Q2 2025 steelmaking revenues that came from the infrastructure and manufacturing market.

The automotive sector is also facing structural headwinds, with the initial 2025 new-vehicle sales forecast of 16.3 million units now being questioned due to tariffs and trade uncertainty. Even though Cleveland-Cliffs has secured new multi-year contracts, if consumers stop buying cars, those contracts will only guarantee volume at a lower overall production level.