Cleveland’s steel of fortune

In what might be a clerical error from the universe, things are going unusually well in Cleveland. Fresh off a Browns victory on Sunday, the city got another reason to celebrate when Cleveland-Cliffs reported its strongest quarter in three years today, sending shares soaring more than 16%.

The steelmaker swung to a $165 million profit after eight consecutive losing quarters, while adjusted EBITDA more than quadrupled year-over-year to $612 million. Adjusted earnings of 28 cents per share topped Wall Street’s forecast of 21 cents, while revenue rose 18% to $5.6 billion—only slightly missing expectations.

But the real winner was outlook: Cleveland-Cliffs expects to generate more than $4 billion in adjusted EBITDA in 2027, roughly 60% above Wall Street’s $2.5 billion estimate. The company generated just $37 million in all of 2025.

Steeling for optimism

Cleveland-Cliffs’ ambitious forecast reflects a broader recovery in the US steel industry, with several factors positioning the company for a much more profitable 2027:

• Less foreign competition: The Trump administration doubled tariffs to 50% on many steel imports last year. In fact, US finished-steel imports fell 18.5% in the first eight months of 2026, giving domestic producers greater pricing power.
• Higher selling prices: With less pressure from foreign competitors, benchmark US steel prices have climbed to around $1,350 per metric ton from roughly $850 a year ago. Cleveland-Cliffs’ own average selling price rose 14% last quarter.
• More lucrative contracts: Cleveland-Cliffs has secured higher prices and smaller discounts in its 2027 customer agreements, with many incorporating take-or-pay commitments that provide more predictable demand. Management expects renewals to contribute more than $1 billion in additional annual EBITDA.

Now, that spirit is spreading across the industry, with fellow US steelmakers Nucor and Steel Dynamics also trading higher today.

Don’t tempt fate

But Cleveland-Cliffs’ rosy outlook hinges on what management calls “prevailing market conditions,” which aren’t guaranteed to last. Higher steel prices also have hazards: While they boost producers’ profits, they also raise costs for customers, potentially weakening demand. CEO Lourenco Goncalves doesn’t seem worried, though. “Now the problem is no longer price. The problem is having access to steel,” he said in an earnings call.

Wall Street isn’t quite as convinced. Barclays maintained its bearish Underweight rating Monday despite raising its price target to $11, while Jefferies lifted its target to $14 but stuck with Hold. Even Wells Fargo, which upgraded the stock earlier this month on expectations that higher steel prices would drive stronger earnings, has stuck with $14. With shares trading around that level today, the targets leave little room for further gains.

Whether Cleveland’s sudden run of good fortune can survive another year is known only to the universe at large. For now, investors might want to exercise some earthly caution.—SY