Cleveland-Cliffs, GM reportedly lock in steel prices for three years - Bloomberg

[Distribution Warehouse With Galvanized Steel Rolls]
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Cleveland-Cliffs (NYSE:CLF [https://seekingalpha.com/symbol/CLF]) has reportedly agreed to sell steel to certain U.S. automakers for a fixed price over the next three years, briefly driving up the share price of the steel producer.

According to sources cited by Bloomberg, the contract is for industry-standard sheet steel for an unspecified amount for three years, a departure from Cleveland-Cliffs’(NYSE:CLF [https://seekingalpha.com/symbol/CLF]) normal practice of one-year contracts.

The deal follows recent U.S. trade policy imposing tariffs of up to 50% on foreign steel imports. By locking in prices for automotive steel, the agreement with Cleveland-Cliffs helps shield against tariff-driven cost increases while boosting steel sales to the U.S. auto industry — a win for both parties.

While it was not disclosed which U.S. automakers entered negotiations with Cleveland-Cliffs, sources tell Bloomberg General Motors (NYSE:GM [https://seekingalpha.com/symbol/GM]) is one potential buyer, as well as Ford (F [https://seekingalpha.com/symbol/F]) and Stellantis (STLA [https://seekingalpha.com/symbol/STLA]), both of whom already source metals from Cleveland-Cliffs (NYSE:CLF [https://seekingalpha.com/symbol/CLF]).

“As a publicly traded America-based company centered on automotive, electrical steels, stainless steel, and plate, Cleveland-Cliffs’ assets, business, and footprint are uniquely positioned to benefit from this new reality,” CEO Lourenco Goncalves said [https://seekingalpha.com/news/4469085-cleveland-cliffs-jumps-4-premarket-on-earnings-beat-us-strength-and-tariff-tailwinds]last month in regard to U.S. trade policy on foreign steel.

The impact of trade policy has contributed to an 86% increase in Cleveland-Cliffs’ share price over the last 3 months.

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