Cleveland-Cliffs Inc.

Cleveland-Cliffs reported second-quarter adjusted EBITDA of $286 million, its best quarter in 2 years. Second-quarter shipments were just over 4 million tons, and average selling price increased by $76 per ton. Management said free cash flow turned positive in Q2 after 2 years of negative free cash flow, and Q2 working capital released about $55 million, driven by lower inventory and a slight build in AP. Looking ahead, management guided Q3 adjusted EBITDA to approximately $575 million, expects shipments above 4.3 million tons, another $55 per ton increase in average price, and a $10 per ton reduction in costs. Management also said the bulk of the $400 million in property-sale proceeds should come in the second half of 2026, and it expects leverage to reach sub 2.5x by this time next year.

Lourenco Goncalves framed Q2 as proof that the company’s recovery is now visible, but said the quarter still understates future earnings power because of maintenance outages and lagged contracts. He emphasized stronger automotive demand, improved pricing, and the benefits of trade enforcement and reshoring, arguing that Cliffs is positioned to benefit from U.S. manufacturing investment and domestic-content policies. He was notably confident about further improvement into Q3, Q4, and 2027, while also stressing that the company will be selective on pricing and will not rush into strategic deals unless valuation and structure are acceptable.

Celso Goncalves said Q2 adjusted EBITDA of $286 million reflected meaningful progress, with shipments just over 4 million tons and ASP up $76 per ton as pricing lags caught up and mix improved. He said Q3 should see volumes above 4.3 million tons, another $55 per ton increase in price, and a $10 per ton cost reduction, supported by the easing of maintenance and inventory effects. He also noted about $55 million of working-capital release in Q2, roughly $400 million of expected property-sale proceeds in the second half, and reiterated that debt reduction remains the number-one capital allocation priority, with leverage targeted below 2.5x by this time next year.

Analysts focused on fixed-price contract resets, Q4 drivers, automotive volume upside, and the mechanics of cash generation and debt paydown. Management said non-auto contract resets begin in the second half and run through November/early December, with renewal prices expected to move materially higher given the current pricing backdrop; on auto, they said Cliffs is gaining share and will push for higher prices. On working capital, Celso said Q2’s $55 million release came from lower inventory and a slight AP build, while Q3 could see a slight working-capital build as pricing rises. On Canada and Stelco, management said hot-rolled pricing has improved but galvanized remains pressured, and they warned the Canadian footprint could be adjusted if needed to improve economics.