Cleveland-Cliffs, GM reportedly lock in steel prices for three years – Bloomberg

Cleveland-Cliffs (NYSE:CLF) has reportedly agreed to sell steel to certain U.S. automakers for a fixed price over the next three years, briefly driving up the share price of the steel producer.

According to sources cited by Bloomberg, the contract is for industry-standard sheet steel for an unspecified amount for three years, a departure from Cleveland-Cliffs’(NYSE:CLF) normal practice of one-year contracts.

The deal follows recent U.S. trade policy imposing tariffs of up to 50% on foreign steel imports. By locking in prices for automotive steel, the agreement with Cleveland-Cliffs helps shield against tariff-driven cost increases while boosting steel sales to the U.S. auto industry — a win for both parties.

While it was not disclosed which U.S. automakers entered negotiations with Cleveland-Cliffs, sources tell Bloomberg General Motors (NYSE:GM) is one potential buyer, as well as Ford (F) and Stellantis (STLA), both of whom already source metals from Cleveland-Cliffs (NYSE:CLF).

“As a publicly traded America-based company centered on automotive, electrical steels, stainless steel, and plate, Cleveland-Cliffs’ assets, business, and footprint are uniquely positioned to benefit from this new reality,” CEO Lourenco Goncalves said last month in regard to U.S. trade policy on foreign steel.

The impact of trade policy has contributed to an 86% increase in Cleveland-Cliffs’ share price over the last 3 months.