Cleveland-Cliffs Faces Downgrade Amid US Steel Investment Concerns

CLEVELAND, Ohio — Jefferies analyst Christopher LaFemina downgraded Cleveland-Cliffs Inc. (NYSE: CLF) from ‘Buy’ to ‘Hold’ on May 28. The rating change accompanied a reduction in the price target from $10 to $6, as the company’s stock has dropped 39% year to date, nearing its 52-week low.

The downgrade stems from concerns regarding significant investments in the U.S. steel sector, particularly Nippon‘s proposal of a $14 billion investment in U.S. Steel’s operations. LaFemina noted that such investments could adversely affect other steel producers, making Cleveland-Cliffs particularly vulnerable due to its high leverage and dependence on steel pricing.

Cleveland-Cliffs, known for its flat-rolled steel products, reported a first-quarter net loss of $0.92 per share, exceeding analysts’ expectations of a loss of $0.67. The revenue for the quarter was $4.63 billion, slightly below the predicted $4.68 billion. In light of the widening net loss, the company is taking measures to enhance profitability, including idling non-core assets and considering potential asset sales.

To adapt to market demands, Cleveland-Cliffs plans to restart one of its blast furnaces in 2026, aiming to meet increasing automotive steel needs. Currently, the company maintains a debt-to-equity ratio of 1.22, and analysts forecast a loss of $2.20 per share for the year 2025.

As Cleveland-Cliffs navigates these challenges, the long-term impact of increased competition and the evolving steel market remains uncertain.