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| Statement |
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| Our cost reduction performance was also very good during Q3, improving by $31 per net ton quarter-over-quarter |
| As for our annual automotive negotiations, our October 1st renewals, which represent about 30% of our total annualized auto volumes were another success |
| As a consequence of our operating practices utilizing HBI and maximizing scrap, Cliffs is among the lowest carbon intensity blast furnace base oxygen furnace operations in the entire world, and certainly much better than any of the current top 10 largest steel producers in the world |
| In fact, we have seen much better demand from these other automakers |
| We are just better at meeting our customer's needs in a detailed, driven and customized business like automotive, reliable quality, customer service, and meeting just in time needs are paramount and Cliffs does that better than anyone else |
| What sets Cliffs apart in automotive is our excellence at serving the clients |
| In fact, in these negotiations, we're successful in implementing the Cliffs H surcharge that we discussed last quarter |
| And since then, we are demonstrating that good equipment and good people, good union labor force can produce a lot of steel |
| This solid performance in costs is expected to continue into next year |
| We at Cleveland-Cliffs mourned the loss of Tom Conway, but our relationship with the USW will continue into the future, stronger than ever |
| This outperformance in automotive steel shipments and the lower service center shipments helped to mitigate the change in average selling prices quarter-over-quarter with a richer mix, holding strong above $1,200 per net ton even after the drop in overall index prices during the quarter |
| We've been very successful in M&A in the past |
| So we're able to keep our prices in good shape, and we implemented Cliffs H |
| The maintenance activities we performed last year have paid off for us as our operations have been running reliably, affording us the ability to achieve these strong shipment levels all year |
| Steel shipments from Cleveland-Cliffs to the automotive sector in Q3 were actually a quarterly record |
| So three quarters in a row, in an environment that's not the most vibrant I have ever seen, for sure, we have seen better than that |
| So, so far, so good |
| And I believe they will, because I'm a very optimistic person |
| How much less, time will tell, because we only have one trial so far in our smallest blast furnace in our fleet, that's Middletown, which was a big success |
| Back in August, we announced a potential exciting and transformational opportunity for Cleveland-Cliffs |
| Fast forward to Q3, our demand forecast has been confirmed and we have absolutely taken advantage of that |
| Yeah, I mean, we expect further cost reductions next year, as we will see benefit from this new coal contract and lower natural gas prices for the hedge portion |
| As a direct result of increased automotive production volumes, we actually set a new company record for direct automotive shipments during the third quarter, surpassing the previous two healthy quarters, even in the midst of model year changeovers and all the uncertainty before the strike was called by the UAW |
| But working capital should provide us a nice tailwind from a free cash flow standpoint |
| Q3 was our third straight quarter with total steel shipments above 4 million net tons, even in a business environment where service centers sat on their hands and were not actively buying for most of the quarter |
| There's numerous competitive forces every day to maintain and improve this reputation based on excellence |
| Lorenzo, really appreciated your comments on hydrogen and good job there |
| But we feel good where we are right now |
| We've executed well-timed acquisitions that we haven't overpaid for |
| I hope you're well |
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| As you may recall, we had to sacrifice production and shipments last year to bring some of these steel mills acquired in December, 2020 from ArcelorMittal USA to a reliable level of performance |
| But the problem is that our clients have all kinds of problems with hiring people, supply chain issues, the ability to handle the tonnage |
| Conversely, the service center sector was the one creating in Q3 the most negative impact associated with the UAW strike, not the automotive OEMs themselves |
| It's another competitive threat that we have to continue to take seriously |
| We also have seen growing competition from EAFs and the ongoing threats from aluminum substitution |
| Look, aluminum has been a threat for steel for a long, long time |
| So that's a pretty difficult position to be in |
| The other question I had was just, I know there's smaller parts of your mix, but we were kind of surprised to see stainless and electrical volumes down |
| We have been willing to sacrifice throughput to serve the wide variety of parts each one of the clients need |
| Look, well, our work done back in the second half of 2022 when we deliberately reduced throughput in order to fix the equipment that we bought from ArcelorMittal USA, that was in much worse shape than the equipment that we bought from AK Steel |
| And with the mixed results, mixed successes, keep in mind, beverage cans one day were all tinplate and now they're all aluminum |
| We did that knowing that our results would take a hit, the results took a hit |
| Regulatory authorities have been strict on fighting M&A deals that harm workers, and rightfully so |
| As of right now, the impact of the current outages on Cliffs are less significant than what we felt from the microchip shortage and other supply chain issues the entire automotive sector went through in 2021 and 2022 |
| This came in less than our previous guide, only due to this mix factor, but we were happily take that trade off due to much higher prices associated with better mix |
| We are going to compete and we're going to win, but we're going to have to fight |
| As we guided, costs are going to be down $15 quarter-over-quarter |
| We expect cost to fall by another $15 per net ton during the fourth quarter |
| This is a business, we are incurring costs |
| This strike has passed the midpoint by a lot |
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