Why did Cleveland-Cliffs shares sink today? Q3 profit plunged nearly 90%
Cleveland-Cliffs (NYSE:CLF) closed 8% lower Tuesday after reporting plunging Q3 profits and rising costs while failing to ease concerns that steel demand is in free-fall.
Benchmark prices for steel in the U.S. have been nearly cut in half since January as strong inflation and weak demand hurt an industry that skyrocketing in 2021.
Cliffs (CLF) shares had tumbled as much as 15% before retracing some of the losses, aided by CEO Lourenco Goncalves' comments in the company's earnings conference call that he expects automotive steel shipments will improve in Q4.
The CEO predicted higher auto demand would return the company to nearly 4M tons of quarterly steel shipments, compared to 3.6M tons shipped in Q3.
"We were encouraged by the 100K [short tons] volume improvement from our automotive customers from Q2 to Q3, and while they're still not back to normalized levels, the worst impact of the chip shortage seems to be behind us," Goncalves said on the call, according to S&P Global Platts.
Cleveland-Cliffs' (CLF) Q3 earnings were "far worse than expected" and steel prices continue to move lower, Quad 7 Capital writes in an analysis newly published on Seeking Alpha.