Shares of steelmaker Cleveland-Cliffs (CLF) finished Friday’s trading lower despite reportedly securing a multi-year agreement to supply steel to certain U.S. automakers at a fixed price. According to Bloomberg, the three-year contract covers industry-standard sheet steel and is a shift from the company’s usual one-year agreements. This strategic change comes amid recent U.S. trade policy updates, which introduced tariffs of up to 50% on imported foreign steel.
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By locking in prices for domestic steel, Cleveland-Cliffs’ deal offers cost predictability for U.S. automakers while helping the steelmaker secure long-term sales. Though the exact automakers were not disclosed, Bloomberg sources identified General Motors (GM) as a possible buyer, along with Ford (F) and Stellantis (STLA), both of which already source steel from Cleveland-Cliffs. The arrangement helps shield the buyers from price volatility driven by tariffs and gives Cleveland-Cliffs a stronger foothold in the auto industry.
Unsurprisingly, CEO Lourenco Goncalves stated last month that the company is in a unique position due to Cleveland-Cliffs’ U.S.-based operations and focus on automotive, electrical, and stainless steels. As a result, the new trade policies appear to have had a significant impact on investor sentiment, which has led to an almost 80% rise in Cleveland-Cliffs’ share price since its May lows.
Is CLF Stock a Good Buy?
Turning to Wall Street, analysts have a Hold consensus rating on CLF stock based on three Buys, six Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average CLF price target of $10.78 per share implies 3.6% upside potential.
