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Here's Why Cleveland-Cliffs Stock Rose Today

By Howard Smith - Mar 31, 2021 at 12:41PM

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The steel company put out guidance that reinforced competitors' views of a very strong market.

What happened

Cleveland-Cliffs (CLF 3.44%) today joined the ranks of other U.S. steel companies that have recently given investors advanced notice of strong, and even record, expected earnings. Shares of the steelmaker responded Wednesday, trading 13.4% higher as of 12:20 p.m. EDT.

So what

Cleveland-Cliffs won't report its first-quarter earnings until April 22, but it gave investors a strong financial forecast for first- and second-quarter adjusted EBITDA, as well as expectations for business to remain strong through the balance of 2021. Fellow domestic steelmakers Nucor (NUE 3.43%) and Steel Dynamics (STLD 4.65%) have also both recently said demand is currently strong, and financial results look to be even stronger in the second quarter. 

Molten steel being poured out of a huge ladle

Image source: Getty Images.

Now what

Cliffs said it expects first-quarter adjusted EBITDA of $500 million, rising to approximately $1.2 billion in the second quarter. For the full year, it expects adjusted EBITDA to reach $3.5 billion, implying continued strength in the market through the second half of the year. 

On March 16, Nucor predicted record quarterly net income of more than $900 million, and said it expects second-quarter results to establish yet another quarterly earnings record. Nucor management added in a statement, "The Company is experiencing strong demand across most of its end markets, including nonresidential construction, automotive, renewable energy, heavy equipment and agriculture." 

One day later, Steel Dynamics also said that strong demand is being led by the automotive and construction sectors. It added in a statement, "Order entry continues to be robust as strong demand, coupled with continuing historically low flat roll steel inventories underpin higher steel selling values." 

Stock prices of the leading steel sector companies are at or near record highs, but if demand remains robust, these names could still have more room to run. 

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Stocks Mentioned

Cliffs Natural Resources Inc. Stock Quote
Cliffs Natural Resources Inc.
$23.46 (3.44%) $0.78
Steel Dynamics, Inc. Stock Quote
Steel Dynamics, Inc.
$84.39 (4.65%) $3.75
Nucor Corporation Stock Quote
Nucor Corporation
$133.07 (3.43%) $4.41

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