Steelmaker Cleveland-Cliffs Inc. has secured two- and three-year supply contracts for flat-rolled steel with some U.S. automakers, according to multiple reports. Although Cliffs has not detailed the agreements, and no automaker has confirmed the reports, it’s widely understood that General Motors is among the steel consumers involved.
Flat-rolled steel is primarily used to form autobody panels. The automakers would not be able to rely on Cliffs for all of their steel requirements.
Neither GM nor any U.S.-based automaker have confirmed their part in any new steel supply contracts. It’s unlikely that any party to such a supply agreement would disclose the terms publicly.
Such agreements would be a further sign of the effect of 25% tariffs imposed on steel and aluminum imports in mid-March. In contrast to many of the major steelmaking nations, U.S. steelmakers have increased their output by almost 5.0% year-over-year.
“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,” according to Lourenco Goncalves, CEO of the Cleveland-based steelmaker.
Cleveland-Cliffs is the second-largest U.S. steelmaker after Nucor Corp., with 17.27 million metric tons of output in 2024. Cliffs’ holdings include Stelco Inc. in Hamilton, Ont., which would not benefit from tariff exemption, as Canada has not yet gained a trade agreement with U.S. In contrast, Japan, South Korea, and the European Union are exporters of flat-rolled steel that may gain some benefit due to the U.S. trade agreements they have arranged.
Automakers typically secure negotiate purchases of flat-rolled and other types of steel for terms much shorter than three years, typically for one year.
Their vulnerability to tariffs on steel and aluminum is complicated by similar tariffs on major auto parts – potentially making them more amenable to longer agreements on purchases of major raw materials. Multi-year price terms would shield them from some effects of inflation, which many economists predict will be the effects of the U.S. tariff policy.
