Cleveland-Cliffs Inc. (CLF) Stock Analysis

Cleveland-Cliffs’ primary competitive advantage is its unique vertical integration, spanning iron ore mining, direct reduced iron, scrap processing, and finished steel production. This structure provides cost stability and supply security, particularly in volatile raw material markets. Unlike most U.S. steelmakers—such as Nucor and Steel Dynamics, which rely heavily on purchased scrap—Cliffs controls the majority of its iron ore and metallics, reducing exposure to price swings and import disruptions.

Cliffs is the largest supplier of steel to the North American automotive sector, a market segment with high technical requirements and long-term contracts. Its automotive-grade, stainless, and electrical steels command premium pricing and customer loyalty; for example, electrical steel, though only 2% of shipment volume, contributed 15% of EBITDA in Q2 2024. Rivals like Nucor and U.S. Steel have struggled to match Cliffs’ technical capabilities and customer relationships in this segment.

The company’s recent acquisition of Stelco adds one of North America’s lowest-cost flat-rolled steel assets, further diversifying its customer base and improving cost competitiveness. Cliffs’ close partnership with the United Steelworkers union, covering over 90% of its hourly workforce, has enabled stable labor relations and operational continuity, a notable advantage over peers with more frequent labor disputes.

Potential threats include cyclicality in steel demand, especially from automotive customers, and high financial leverage. However, Cliffs’ integrated model, technical expertise, and entrenched customer relationships provide a durable edge over less diversified, less integrated competitors.