Cleveland-Cliffs earnings returned to profitability in the third quarter of 2026, answering the central question ahead of its October 19 results release. The steelmaker reported consolidated GAAP net income of $165 million after a $134 million second-quarter loss, while its Canadian subsidiary Stelco became a positive contributor to adjusted EBITDA.
Key Takeaways
- Third-quarter adjusted EBITDA reached $612 million, exceeding management’s earlier $575 million guidance.
- Stelco improved, but Cleveland-Cliffs decided to indefinitely idle its Canadian galvanizing lines.
- Management forecast fourth-quarter adjusted EBITDA of approximately $715 million.
Table of Contents
- Cleveland-Cliffs earnings reverse the second-quarter loss
- Stelco improves while galvanizing lines face an indefinite halt
- Fourth-quarter guidance points to further improvement
- Conclusion
Cleveland-Cliffs earnings reverse the second-quarter loss
For the quarter ended September 30, 2026, consolidated revenue reached $5.612 billion, up from $5.226 billion in the preceding quarter. Adjusted EBITDA increased by $326 million from the second quarter to $612 million.
Cleveland-Cliffs’ third-quarter results announcement showed net income attributable to its shareholders of $152 million, distinct from consolidated net income of $165 million because of earnings attributable to noncontrolling interests. GAAP diluted earnings were $0.26 per share, while adjusted earnings were $0.28.
Chairman and Chief Executive Officer Lourenco Goncalves said average selling prices, sales volumes and unit costs all improved relative to the second quarter. The recovery therefore extended beyond revenue growth to the profitability of the steelmaker’s operations.
| Item | Details |
|---|---|
| Third-quarter steel product sales volume | 4.150 million net tons, compared with 4.025 million in Q2 2026. |
| Average steel selling price | $1,177 per net ton, compared with $1,124 in Q2 2026. |
| Steelmaking gross margin | $454 million, compared with $113 million in Q2 2026. |
| Quarter-end liquidity | $3.2 billion as of September 30, 2026. |
Stelco improves while galvanizing lines face an indefinite halt
Goncalves described the quarter as Stelco’s strongest since its acquisition two years earlier. He said an improvement in the Canadian hot-rolled steel market helped the subsidiary make a positive contribution to EBITDA.
That improvement did not extend across all products. Citing what he described as an oversupplied Canadian galvanized-steel market, Goncalves announced the decision to indefinitely idle Stelco’s galvanizing lines.
Management said the shift toward hot-rolled products would maintain Stelco’s total production tonnage and preserve approximately 2,000 Canadian jobs. Goncalves said affected employees would return when conditions improved, but gave no reopening date. The decision distinguishes a recovery in Stelco’s overall contribution from continuing weakness in one product market.
Fourth-quarter guidance points to further improvement
Cleveland-Cliffs expects fourth-quarter 2026 adjusted EBITDA of approximately $715 million. Its outlook assumes higher pricing will more than offset seasonality, increased maintenance outages, input costs and incentive compensation accruals.
Management also said it expected 2027 adjusted EBITDA to exceed $4 billion, based on contract changes and prevailing price forecasts. That figure is a forward-looking expectation for 2027, not a result or a forecast for full-year 2026.
Goncalves said the company expected substantial fourth-quarter debt reduction, supported by free cash flow and property-sale proceeds. Management retained its target of net debt below 2.5 times EBITDA by the middle of 2027.
Conclusion
The third-quarter results established a return to profit, but Stelco’s galvanizing decision shows that the recovery remains uneven. The next performance benchmark is management’s fourth-quarter adjusted EBITDA forecast of approximately $715 million, alongside its planned debt reduction.
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