Cleveland-Cliffs CEO Lourenco Goncalves told CNBC on Monday that steel production has rebounded along with the pickup in auto production this quarter.
US auto makers are rushing to restore showroom inventory and return to the production schedule after factories closed earlier this year as the country took measures to slow the spread of the novel coronavirus.
“We went through a very profitable and very strong quarter in terms of recovery in demand especially in cars,” he said in an appearance onClosing Bell. “
The US economy quickly plummeted into recession as businesses shut down and unemployment rose across the country, but demand for cars, like demand in the housing market, was one of the unexpectedly strong parts of the economic recovery.
The Big Three auto factories are now in Detroit It works almost at full speed to get back to the production schedule And delivery of new cars to dealerships as the holiday season approaches. SUV and pickup truck sales rose quite well among consumer purchases.
Cleveland Cliffs is the largest US producer of iron ore pellets, which are used in the production of steel. Cleveland, Ohio Corporation Monday announced it would buy The US assets of ArcelorMittal SA, the world’s largest steelmaker, are roughly $ 1.4 billion. The acquisition follows the Cleveland Cliffs $ 1.1 billion purchases from AK Steel in Decembes.
The steel industry suffered its worst downturn during the 2008 financial crisis as demand and producer prices fell from factory closures.
“Cleveland Cliffs has had significant auto exposure and this affected us very seriously in the second quarter,” said Goncalves. “When cars shut down in this country, we had to reduce our production,” but “Q3 was a completely different story.”
Car production in North America is down by 2 million cars compared to this time last year, in part because consumer demand exceeds the time it takes to get new cars from factories to showrooms, according to Charlie Chesbrough, chief economist at Cox Auto.
When carmakers reported US auto sales for September on Thursday, analysts estimated the annual sales pace would exceed the rate in August, which came in at 15.2 million vehicles. That number is higher than the annual sales rate of 8.6 million cars in April, when the industry hit its lowest level due to the epidemic.
Total sales for September are expected to reach 1.29 million units, which will be down from 1.33 million units sold last month and slightly increase from 1.28 million units a year ago.
Shares of Cleveland Cliffs rose 11.6% in Monday’s session to close at $ 6.56.
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