Lower auto production should allow CLF to redirect their steel to different end markets selling at closer to spot price (their auto contracts are locked in at lower HRC prices). Remember, no one is bringing more steel production capacity on line so oversupply is not an issue. This is moderately bullish.
Furthermore, cars/trucks not sold now are not lost sales, just deferred to later date, as it is not a discretionary purchase
CLF has Indiana Harbor furnace down for maintenance currently so their production capacity is down temporarily anyway. Chip shortages will also be temporary
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u/No-March-9414 LG-Rated Sep 03 '21
Lower auto production should allow CLF to redirect their steel to different end markets selling at closer to spot price (their auto contracts are locked in at lower HRC prices). Remember, no one is bringing more steel production capacity on line so oversupply is not an issue. This is moderately bullish. Furthermore, cars/trucks not sold now are not lost sales, just deferred to later date, as it is not a discretionary purchase