Cleveland-Cliffs Inc SWOT & PESTLE ANALYSIS

Strength

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Weakness

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Opportunity

1. Substitutes could reduce the demand for steel & scrap materials which will impact sales: Demand for steel has been growing steadily. However, the availability of substitutes such as aluminum, plastic, and composites could reduce the demand for steel and scrap materials, thus impacting Cleveland-Cliffs' sales. According to a study published in ScienceDirect, the use of composite materials in the automotive industry could potentially reduce the demand for steel by up to 40%. Additionally, the increased use of lightweight materials such as aluminum and carbon fiber in the aerospace and transportation sectors could also impact the steel market. The use of substitute materials and competition from other steel producers could adversely affect its business. The company is taking measures to address this challenge by focusing on product innovation, process improvements, and cost efficiencies to remain competitive. Additionally, it is exploring opportunities to expand into new markets and diversify its product offerings, such as producing high-strength steels for electric vehicles, to mitigate the potential impact of substitutes on its sales.

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Threat

1. Substitutes could reduce the demand for steel & scrap materials which will impact sales: Demand for steel has been growing steadily. However, the availability of substitutes such as aluminum, plastic, and composites could reduce the demand for steel and scrap materials, thus impacting Cleveland-Cliffs' sales. According to a study published in ScienceDirect, the use of composite materials in the automotive industry could potentially reduce the demand for steel by up to 40%. Additionally, the increased use of lightweight materials such as aluminum and carbon fiber in the aerospace and transportation sectors could also impact the steel market. The use of substitute materials and competition from other steel producers could adversely affect its business. The company is taking measures to address this challenge by focusing on product innovation, process improvements, and cost efficiencies to remain competitive. Additionally, it is exploring opportunities to expand into new markets and diversify its product offerings, such as producing high-strength steels for electric vehicles, to mitigate the potential impact of substitutes on its sales.

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Political

1. Geopolitical tensions between the US & China may disrupt, delay, or increase costs for critical supplies & raw materials: Geopolitical tensions between the US and China may lead to disruptions, delays, or increased costs for critical supplies and raw materials, impacting business operations. The tension between the two countries has resulted in the implementation of tariffs and trade restrictions, making it difficult for companies to source materials from China. Additionally, the Chinese government has been implementing policies to reduce the export of raw materials, which could further aggravate supply chain issues. The company has identified this and has taken steps to mitigate the impact of geopolitical tensions. These steps include identifying alternative sources of supply, increasing inventory levels, and exploring potential partnerships with other companies to secure critical materials. By taking these actions, Cleveland-Cliffs aims to minimize the impact of geopolitical tensions and maintain its operations.

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Economic

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Social

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Technological

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Legal

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Environmental

1. Developing clean hydrogen solutions to reduce carbon footprint & address the issue of climate change: The company has joined the Great Lakes Clean Hydrogen coalition & is actively exploring the potential of hydrogen injection into its blast furnaces and other processes to reduce emissions. Cleveland-Cliffs’ state-of-the-art DR plant is hydrogen-ready, and the facility has been engineered to replace up to 30% of natural gas with hydrogen without modifications. While fuel switching for wide-spread clean hydrogen replacement in the global iron and steel industry will require large quantities of clean hydrogen that are not currently available, it is working to facilitate the commercial deployment of clean hydrogen as a decarbonization strategy. The use of hydrogen in place of carbon-based natural gas can help the company achieve its sustainability goals and reduce its carbon footprint. By developing clean hydrogen solutions, Cleveland-Cliffs can position itself as a leader in the transition to a low-carbon economy and attract customers who prioritize sustainable practices.

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