Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Cleveland-Cliffs this year projects steel prices at $650/nt ($716.51/mt), iron ore prices at $90/mt, and pellet premiums at $50/mt, based on the full-year average price assumptions.


The company anticipates generating about $300-325mn in net income and $550-575mn on an adjusted EBITDA in calendar 2020, although the plan excludes the pending AK Steel acquisition, indicated its 2019 earnings report. As an individual company, Cliffs expects 125mn in interest expenses, $25mn in non-cash tax expenses, and $100mn in depreciation, depletion, and amortization, in 2020.


Cliffs also expects to receive about $60mn of cash tax refunds during Q3 2020. 


The individual company projects $350-$400mn in capital spending this year, which comprises an outstanding balance for the completion of the Toledo HBI production plant, sustaining capital, and capitalized interest. 


Cliff’s mining and pelletizing production volume was 19.9mn mt in 2019, down from 20.3mn in 2018. Production volume in Q4 2019 was 5.2mn mt, decreasing from 5.6mn mt during the same quarter in 2018, as touched on in Mexico clears Cliffs and AK Steel merger.


The company’s sales volume in 2019 was 19.4mn mt, decreasing from 20.6mn mt in 2018. Its sales volume during last year’s fourth quarter reached 5.8mn mt, but it decreased from 6.5mn mt during Q4 2018 as a result of diminished customer demand. However, the decline was partly offset by intercompany sales to the Toledo HBI plant, which will open this June.


Cliffs’ consolidated revenues were $2bn in 2019, marginally declining from $2.3bn in 2018. Cost of goods sold was $1.4bn in 2019, down from $1.5bn in 2018.


Consolidated revenues were $534mn in Q4 2019, compared to $696mn during the same quarter one year prior. Cost of goods sold reached $407mn in Q4 2019, compared to $494mn in Q4 2018.


Cliffs’ net income was $293mn during calendar 2019, down from a $1.1bn in profit for full-year 2018. The disparity is partly due to 2018 profits being impacted by the release of a $461mn tax valuation allowance, as well as a 228mn increase from past foreign currency conversion changes.


The company reported a Q4 2019 net income of $63.2mn, decreasing from a profit of $609.5mn during the same quarter 2018.

Cliffs reported adjusted EBITDA at $525mn for calendar 2019, compared to $766mn in 2018. The adjusted EBITDA was $111mn for Q4 2019, compared to $188mn in Q4 of 2018.


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