Cleveland-Cliffs Inc. (NYSE: CLF) saw its stock surge 7.37% to $9.76 on Friday, recovering some ground after a week of digesting a first-quarter loss and management's optimistic cash flow outlook. The steelmaker's shares fluctuated between $9.05 and $9.96 during the session before closing near the day's high.
The rally was supported by a notable spike in options activity. MarketBeat reported that 61,622 call options traded on Friday, roughly 42% above the average daily call volume, signaling bullish sentiment among investors betting on a recovery.
For the first quarter, Cleveland-Cliffs reported revenue of $4.9 billion, up from $4.6 billion a year earlier, but recorded a GAAP net loss of $229 million, or 42 cents per share. Adjusted EBITDA came in at $95 million, after absorbing an $80 million hit from weather-related energy costs. Chief Executive Lourenco Goncalves characterized the quarter as facing "short-term headwinds" but reiterated the company's expectation of "healthy positive free cash flow" in the second quarter.
Cliffs operates a vertically integrated model, controlling the full production chain from iron ore and pellets to steelmaking, finishing, stamping, and tubing, with a focus on high-value sheet steel for North American automakers. This structure gives the company a unique position in the steel market but also exposes it to fluctuations in both input costs and end-market demand.
First-quarter steel shipments totaled 4.108 million net tons, down 1% from the prior year. The average selling price rose to $1,048 per net ton, providing some margin relief. Revenue from direct automotive customers reached $1.37 billion, while business with distributors and converters edged slightly higher to $1.46 billion.
Management is looking for a stronger second quarter. Chief Financial Officer Celso Goncalves told investors on the earnings call, "Q2 is going to be much better than Q1," citing expectations for shipments to remain above 4.1 million tons and an estimated $60-per-ton increase in selling prices from the first quarter.
The bounce outperformed other major U.S. steel stocks. Nucor closed at $214.29, up 0.61%, while Steel Dynamics traded at $226.79, gaining 0.80%. Cliffs emerged as the more volatile play among the three on Friday.
However, a cloud remains over the company's deal with South Korea's POSCO. Barron's noted earlier this week that sentiment took a hit as the agreement remained unresolved, despite Cliffs posting quarterly adjusted EBITDA just above Wall Street's forecasts. The company's latest filing indicated the memorandum of understanding is still contingent on final terms, with no guarantee the partnership will move forward or generate the targeted financial returns.
Cliffs continues to trim its footprint. In its quarterly filing, the company flagged plans to idle the Gary plate finishing line and one of the two plate mills at Burns Harbor in the second quarter, following recent decisions to idle or close several operations in 2025. The core risk remains that steel prices may not climb fast enough to offset rising costs for energy, outages, freight, and raw materials.
Cash levels at Cliffs looked tight at the end of March, at just $45 million, though the company pointed to $3.1 billion in liquidity when including its asset-backed credit line. Capital spending for the next 12 months is expected to be about $800 million. For now, Cleveland-Cliffs shares are trading on execution hopes rather than a reported earnings turnaround. The key drivers to watch are second-quarter pricing, demand from automakers, and cost-cutting initiatives—whether these translate into real cash flow, not just upbeat guidance.
