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Cleveland-Cliffs’s Cash Costs Were Higher in Q2, but No Worries

Annie Gilroy
Cleveland-Cliffs’s Cash Costs Were Higher in Q2, but No Worries

Cleveland-Cliffs’s (CLF) cash cost of goods sold for its US Iron Ore (or USIO) division was $62.30 per ton for Q2 2018, an increase of 4.8% YoY (year-over-year) and 9.2% sequentially. The increase in cash cost was mainly due to the favorable shift in product mix. Due to increased customer demand, the company is producing a higher percentage of the higher-cost, higher-margin Mustang pellet, which it originally expected. It believes that will be a net positive for the company. Higher energy, labor, and royalty rates also impacted the company’s cash costs during the current quarter.