Canadian Steel Advocacy Drives Cleveland-Cliffs Gains Amidst Policy Push

Canadian Steel Industry Urges Government Intervention Amid High Import Levels

Canadian steelmakers and the United Steelworkers union converged in Windsor to advocate for robust government policies aimed at bolstering the domestic steel industry and mitigating the impact of high import volumes. This concerted effort coincided with a notable 8.51% increase in the stock price of Cleveland-Cliffs Inc. (CLF), signaling investor optimism regarding potential policy shifts.

Stakeholders Call for "Buy Canadian" and Enhanced Trade Protections

The rally, featuring executives from Cleveland-Cliffs and Zekelman Industries, highlighted the precarious position of the Canadian steel sector. Canada currently relies on imports for approximately 60% of its domestic steel consumption, positioning it as one of the world's largest per capita steel importers. This situation underscores a critical need for policy intervention to ensure the viability and growth of Canadian steel production.

Key policy changes being championed include significant "Nation Building" investments, the implementation of "Buy Canadian" policies, and the introduction of a Made-in-Canada tax credit. Furthermore, the industry is pushing for a tightened Tariff Rate Quota System, bolstered trade enforcement measures, and a robust melt-and-pour rule accompanied by a 25% surtax. To address specific trade imbalances, advocates are also calling for the removal of the U.S. remission exemption, proposing a 50% Canadian retaliatory surtax, and the establishment of a Carbon Border Adjustment Mechanism. These measures collectively aim to create a more equitable and protective environment for Canadian steel.

Cleveland-Cliffs Inc. Sees Stock Advance Amid Strategic Financial Maneuvers

Cleveland-Cliffs (CLF) experienced an 8.51% price advance, closing at $13.90. While directly influenced by the advocacy efforts, this movement also follows a recent upsized debt offering. The company increased its issuance of senior unsecured guaranteed notes maturing in 2034 by nearly 40% to $275 million, with an implied yield below 7%. The proceeds from this offering are earmarked for retiring existing debt, showcasing Cleveland-Cliffs' focus on strategic debt management despite carrying over $7.7 billion in long-term debt.

The company, with a market capitalization of approximately $6.88 billion, primarily serves the North American automotive sector. Its Price-to-Book (PB) ratio stands at 1.18, indicating it is trading near its 1-year high. While the company has observed a decline in its gross margin over time, it is currently labeled as "Fairly Valued" according to its GF Value of $13.54. With a beta of 1.44, CLF exhibits higher volatility than the broader market, presenting both opportunities and risks for investors.

Analyst sentiment for CLF is mixed, with an average target price of $8.78 (implying a 7.34% downside from a recent price of $9.48), though the high estimate reaches $14.00. GuruFocus estimates a one-year GF Value of $14.74, suggesting a potential 55.49% upside from the same reference point. The consensus brokerage recommendation remains a "Hold" with an average rating of 2.9 on a scale where 1 is "Strong Buy."

For the third quarter, Cleveland-Cliffs anticipates a $20 per ton reduction in costs and stable shipment volumes compared to Q2. The company is actively enhancing its market position in Canada following its acquisition of Stelco, a move expected to strengthen its influence in the Canadian steel market more significantly than in the U.S.

Broader Context: Canadian Trade Dynamics and Policy Crossroads

The advocacy for Canadian steel occurs within a complex economic and political landscape. Canada's merchandise trade deficit widened to $6.32 billion in August 2025, partly attributed to tariffs on metals, machinery, and forestry products. This has put pressure on Canada's competitiveness and the Bank of Canada regarding future interest rate decisions.

The Canadian government faces a looming election and a shifting political landscape, which could influence the pace of regulatory reforms. Discussions surrounding steel and aluminum tariffs with the U.S. have been ongoing, with past acknowledgments of a 50% tariff on Canadian steel imports by the U.S.

Looking Ahead: Policy Decisions and Market Stability

The immediate future for the Canadian steel industry hinges on the government's response to the calls for stronger domestic support. Successful implementation of the proposed policies could lead to a stabilization and boost in domestic steel production and employment, reducing reliance on imports. However, such measures also carry the risk of potential trade disputes and increased costs for steel-dependent downstream industries.

Investors will closely monitor official statements and legislative actions from the Canadian government, as well as any developments in U.S.-Canada trade relations. The strategic financial management and operational enhancements by companies like Cleveland-Cliffs will also be key factors in their future performance within a potentially evolving policy environment.