According to Cleveland Cliffs (CLF, Financial) CEO Lourenco Goncalves, 2024 marked the lowest domestic steel demand since 2010, excluding the COVID-impacted year of 2020. This downturn is evident in CLF's financials and stock price, which has dropped about 53% year-over-year. The company recently issued Q4 revenue guidance of $4.30 billion, a nearly 16% decline year-over-year, marking the tenth revenue drop in the past eleven quarters.

The auto industry's sluggishness, driven by high interest rates and cautious consumer spending, has significantly impacted steel demand. Falling steel prices, due to soft demand and high manufacturing inventories, have pressured earnings. This was seen in U.S. Steel's (X, Financial) slightly worse-than-expected Q4 loss of $(0.13).

However, there are signs of improvement for CLF and competitors like U.S. Steel (X, Financial), Nucor (NUE, Financial), and Steel Dynamics (STLD, Financial). STLD indicated that steel pricing is stabilizing, with rising customer optimism. CLF echoed this sentiment, noting improvements in automotive and non-automotive orders and expressing confidence in the impact of President Trump's agenda on the company.

• CLF and its competitors expect Trump's proposed tariffs on China, Mexico, and Canada to drive up steel prices by reducing U.S. imports. During Trump's first term, steel prices initially surged by about 100% to $1,000 per short ton in August 2018, but later fell back to $500 per ton by the end of 2019 as demand waned.
• Beyond tariffs, CLF is optimistic about its $2.5 billion acquisition of Stelco, a Canadian flat-rolled steel producer. Completed in November, this acquisition expands CLF's footprint in Canada and doubles its exposure to the flat-rolled spot market.
• CLF is also considering acquiring U.S. Steel after the Biden Administration blocked Nippon Steel's $55/share bid. This follows a previous attempt by CLF in August 2023 to acquire U.S. Steel at $54/share, which was abandoned over regulatory concerns.

In summary, 2025 appears promising for CLF after a challenging period, though uncertainties persist. If end market demand doesn't improve significantly due to high interest rates or other macroeconomic factors, potential tariff benefits could be negated.