Shares of Steelmaker Cleveland-Cliffs (CLF) rose on Tuesday after announcing plans to temporarily shut down parts of its steel plant in Dearborn, Michigan, due to soft demand in the U.S. auto market. Around 600 workers will be laid off as the company idles the blast furnace, steel shop, and casting facilities starting in July. However, a spokesperson told Bloomberg that the Cleveland C6 blast furnace, which was previously idled, should be fully operational by then.
The company expects to resume operations at the Dearborn plant once President Trump’s trade policies are fully rolled out. Interestingly, Citi analysts, led by five-star rated Alexander Hacking, noted that this move isn’t a cut in overall production capacity, but rather a “re-balancing” to improve efficiency by shifting work to more productive locations. Indeed, the Dearborn shutdown is meant to be offset by restarting the Cleveland C6 furnace.
This announcement comes after Cleveland-Cliffs’ decision last week to temporarily idle two iron ore operations. In total, the two moves will reduce the company’s workforce by about 1,200 employees, or 3% of its total. Despite the job cuts, Citi analysts believe that the market may see these steps as part of a broader push to streamline operations and improve long-term performance. It is worth noting that Citi has a Hold rating on CLF stock with a price target of $11 per share.
Is CLF Stock a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on CLF stock based on five Buys, three Holds, and zero Sells assigned in the past three months. Furthermore, the average CLF price target of $13.65 per share implies 45.1% upside potential.
