Should You Buy The Dip In Cleveland-Cliffs Stock?

After witnessing a strong rally from rising steel and iron ore prices, Cleveland-Cliffs Stock (NYSE:CLF) has been undergoing a correction over the past two months. While the Russia-Ukraine war continues to cause volatility in global energy markets, the EIA’s long-term forecast for the Brent benchmark is below current levels – indicating the potential for increased discretionary spending in the coming years. cleveland-looking at the rocks
CLF
A strong leadership position in automotive steel component sales in the US is likely to be improved by rising financial demand. Trefis highlights key factors of stock price changes, including revenue and valuation multiples, in an interactive dashboard analysis. Why did Cleveland-Cliffs stock move up?

Cleveland-Cliffs has transformed into a major steel producer in America

In 2020, Cleveland-Cliffs acquired ArcelorMittal USA and AK Steel and transformed itself from an iron ore mining company into a vertically integrated steel producer. The company reported revenue of $20.4 billion and sales of 16 million tons in 2021. With a product portfolio including Hot-Rolled Steel, Cold Rolled Steel, Coated Steel, Stainless Steel and Plates, the company caters to a wide customer base. US Per the most recent filing, the company’s exposure to the automotive, infrastructure, distribution and steel producing markets was 25%, 27%, 38% and 10%, respectively. In 2020, North America consumed 124 million tons of steel and produced 101 million tons – making it a net importer. Considering the inherent strength in demand and buoyant steel prices – the company is likely to witness topline growth in the coming years.

Key trends in the automotive and infrastructure markets

Cleveland-Cliffs is a leading supplier of high quality steel products to the automotive industry. Over the past two years, North American light vehicle production has held steady at 13 million units — about 3 million units less than the historical 10-year average. While demand was strong, production rates were affected by global semiconductor shortages and supply-chain issues. The trend towards electric vehicles and larger vehicle platforms is likely to aid automotive demand in the coming years. In 2021, the residential infrastructure market witnessed strong growth driven by housing demand. While the non-residential sector reported contraction, the growing pressure for renewable energy is likely to accelerate the sector. (related: Is Freeport-McMoRan Stock a Buy?,

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