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Cliffs redirects rolled steel to spot market

Cleveland-Cliffs, the largest flat-rolled steel producer in North America, has redirected some of its production destined for the automotive market to the spot market.

During 2021, light vehicle production in North America was 13 million units, the same as the previous year.

Thus, the production of each of the last two years decreased by 3 million units compared to the average of the previous 10 years, mainly due to the global shortage of semiconductors, as well as the shortage of other materials and interruptions in production. supply chain as a result of the Covid-19 pandemic.

This has caused several disruptions among light vehicle manufacturers despite strong consumer demand.

In light of these production cuts, Cliffs has redirected certain volumes originally intended for this end market to the spot market, where demand has been strong and prices have reached all-time highs.

Additionally, during 2021, consumer demand for sport utility vehicles, trucks and crossovers continued to increase, while demand for smaller sedans and compact cars decreased.

Cliffs

The company has benefited by intentionally targeting larger vehicle platforms to take advantage of consumer preferences, and has focused and been successful in sourcing across numerous SUV, pickup, crossover and larger vehicle platforms.

As a result, a significant portion of the automotive carbon steel it sells is used to produce these popular larger vehicles.

In addition to benefiting from their exposure to strong consumer demand for larger vehicles, these vehicles also typically contain a higher volume of steel than smaller sedans and compact cars, giving the company an opportunity to sell a greater proportion of its steel products to our automotive customers.

Environment

On the other hand, automakers are under pressure to achieve CAFE standards mandated by the federal government.

CAFE standards generally require automakers to meet an average fuel economy target across the entire fleet of vehicles they produce by certain key dates.

So its automotive customers continue to explore various avenues to achieve the standards, including lightweight components and the development of more fuel-efficient engines.

Weight reduction efforts include the use of alternatives to traditional carbon steels, such as AHSS and other materials.

While this could reduce the aggregate volume of steel consumed by the auto industry, Cliffs expects demand for current and next-generation AHSS to increase and higher margins for its AHSS and other innovative steels.

Cliffs is vertically integrated from mined raw materials, DRI and ferrous scrap to primary steelmaking and downstream finishing, stamping, tooling and pipe.

The company is also the largest supplier of steel to the automotive industry in North America and serves a wide range of other markets due to its comprehensive offering of flat-rolled steel products.

Headquartered in Cleveland, Ohio, the company employs approximately 26,000 people at its operations in the United States and Canada.

On November 18, 2021, we completed the acquisition of FPT, a leading processor of premium ferrous scrap in the United States.

These operations consist of 22 scrap processing plants, primarily in the Midwest region of the United States.

 

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