Stelco’s American Owner Surges 16% on Wall Street While Up to 500 Ontario Steel Jobs Face Cuts

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Wall Street is celebrating a financial turnaround at one of America’s largest steelmakers, even as hundreds of Canadian workers face an uncertain future.

Shares of Cleveland-Cliffs, the American company that owns Stelco, jumped more than 16% on October 19, 2026, after stronger-than-expected quarterly earnings and an ambitious profit forecast for 2027.

The rally comes as Stelco moves ahead with plans to eliminate up to 500 positions across its Hamilton and Nanticoke operations in Ontario, citing U.S. tariffs, weakening demand and competition from imported steel.

The contrast has intensified an already bitter dispute involving workers, union representatives and the federal government. While Cleveland-Cliffs says its Canadian operations are improving financially, Ottawa is questioning whether the layoffs violate employment commitments made when the American steelmaker purchased Stelco in 2024.

Cleveland-Cliffs Shares Jump 16% After Strong Quarterly Earnings

Cleveland-Cliffs delivered a substantial financial turnaround during the third quarter of 2026, sending its shares sharply higher on Wall Street. The company’s stock climbed approximately 16.3% on October 19 following the release of results that exceeded profit expectations. Cleveland-Cliffs reported consolidated revenue of US$5.6 billion for the three months ending September 30, compared with US$5.2 billion in the previous quarter. It also recorded net income of US$165 million, reversing a US$134-million loss in the second quarter. Steel shipments reached approximately 4.2 million net tons, reflecting improving business conditions across its North American operations.

The company’s adjusted earnings before interest, taxes, depreciation and amortization, commonly known as EBITDA, increased to US$612 million from US$286 million in the previous quarter. That performance surpassed management’s earlier guidance of US$575 million and represented the company’s strongest quarterly result in three years. Investors responded enthusiastically to the improving financial picture. However, the celebration contrasted sharply with developments in southern Ontario, where Stelco employees were already receiving layoff notices. The stock market rally reflected expectations for Cleveland-Cliffs’ overall business, not an improvement in employment prospects at every facility it owns.

A Massive 2027 Profit Forecast Gives Investors Another Reason for Optimism

The most significant development for investors was Cleveland-Cliffs’ outlook for 2027. Chief executive Lourenco Goncalves told shareholders that the company expects adjusted EBITDA to exceed US$4 billion next year, supported by stronger customer contracts, improving steel prices and favourable conditions in the American market. The projection was substantially higher than analysts had anticipated and suggested the company could experience one of its strongest financial years in recent history. Management also expects approximately US$715 million in adjusted EBITDA during the fourth quarter of 2026, despite normal seasonal pressures and scheduled maintenance work.

Goncalves credited the American trade environment with helping domestic steel producers regain pricing power. U.S. tariffs have restricted foreign competition, while American manufacturers increasingly seek reliable domestic suppliers. Cleveland-Cliffs also expects stronger cash generation to support debt reduction. These forecasts remain projections rather than guaranteed earnings, and steel prices can change quickly when industrial demand weakens. Nevertheless, the outlook helps explain why investors rewarded the company’s latest financial performance. For Canadian steelworkers, the difficult question is why such an optimistic corporate forecast is arriving alongside significant job losses at one of its Canadian subsidiaries.

Stelco Reports Its Strongest Quarter Since the American Takeover

One of the most surprising details in Cleveland-Cliffs’ earnings announcement concerned Stelco itself. Goncalves said the Canadian steelmaker delivered its strongest quarter since the American company completed its acquisition in November 2024. Improvements in Canada’s hot-rolled steel market helped turn Stelco into a positive contributor to Cleveland-Cliffs’ adjusted EBITDA during the third quarter. This represented a meaningful improvement after a difficult period in which the Canadian business had weighed on the parent company’s financial results. Stronger demand and pricing for hot-rolled steel helped improve performance despite continuing trade uncertainty.

However, Stelco’s improving overall results did not extend equally to every product line. The company says its cold-rolled and galvanized steel operations remain under severe pressure from weak demand and imported competition. Goncalves indicated that the affected galvanized-steel business represents less than 20% of Stelco’s production. Management believes concentrating on more profitable hot-rolled products will preserve approximately 2,000 Canadian jobs while maintaining overall steel production tonnage. That explanation highlights an important distinction: Stelco can become more profitable as a business while simultaneously reducing employment in certain operations. For affected workers, improved corporate earnings provide little immediate reassurance about when their jobs might return.

Hamilton and Nanticoke Workers Face Layoffs Across Multiple Operations

The immediate consequences are concentrated at Stelco’s Hamilton Works and Lake Erie Works facilities. On September 28, the company announced plans to indefinitely idle cold-rolled and coated steel finishing operations in Hamilton, affecting workers who produce materials used in vehicles, appliances, construction and industrial equipment. The United Steelworkers union initially estimated approximately 350 layoffs in Hamilton, with additional reductions expected in Nanticoke. By October 8, union representatives said roughly 330 Hamilton workers were expected to be affected, with other positions also at risk. The company’s broader announcement placed the maximum number of affected employees at 500.

Layoff notices began arriving in early October, with the first job cuts taking effect October 11. Additional reductions are being implemented in stages as equipment is taken out of service. At Lake Erie Works, approximately 40 to 50 workers could be affected beginning October 24 as the company reduces activity on its steel pickling lines. Stelco has indicated that some Hamilton employees may receive opportunities to transfer to Nanticoke. However, transfers will not necessarily accommodate everyone losing their position. The company describes the reductions as temporary measures connected to an indefinite production shutdown, meaning workers have no confirmed date for returning to their previous jobs.

U.S. Steel Tariffs Have Severely Reduced Canada’s Traditional Export Market

The difficulties facing Stelco are closely connected to Washington’s increasingly restrictive trade policies. President Donald Trump’s administration raised American tariffs on imported steel to 50% in June 2025, making Canadian products substantially more expensive for many U.S. customers. Canada’s steel industry has historically depended heavily on cross-border sales, particularly to automotive manufacturers, construction businesses and industrial suppliers. Once those exports became more expensive, Canadian steelmakers faced the challenge of replacing American orders while competing for a comparatively small domestic customer base.

In an October 9 letter to Industry Minister Mélanie Joly, Stelco president Paul Simon outlined the extent of the disruption. He said Canadian exports of cold-rolled and coated steel to the United States fell 58% compared with levels before the trade war. That represented approximately 226,000 fewer tonnes during the second quarter of 2026 compared with the average quarterly volume in 2024. Simon also reported a 10% decline in domestic demand for those products. These figures formed part of Stelco’s explanation for its layoffs rather than an independent finding that tariffs alone caused every lost order. Nevertheless, the decline illustrates how quickly changing trade rules can undermine established industrial relationships.

Foreign Steel Imports Are Creating Another Problem for Canadian Producers

Losing American customers is only part of Stelco’s explanation for the downturn. The company also argues that foreign producers continue supplying significant quantities of steel to Canada, weakening prices for domestically manufactured products. In his letter to Ottawa, Simon said imports represented approximately 45% of Canadian demand for cold-rolled and coated steel. He estimated that falling exports, weaker domestic consumption and import competition had collectively reduced the market available to Hamilton’s finishing operations by more than one million tonnes annually. That represents roughly twice the facility’s historical annual production of those products.

Ottawa has already introduced measures intended to address foreign steel competition. Canada’s tariff-rate quota system limits certain steel imports from countries outside CUSMA, with volumes exceeding specified thresholds generally subject to a 50% surtax. The government tightened those restrictions in December 2025 and extended key measures in 2026. Cleveland-Cliffs acknowledges that these policies helped improve Canada’s hot-rolled steel market but argues they have not sufficiently protected galvanized steel production. The company has also criticized the federal government’s offer of financial assistance, saying temporary support cannot substitute for reliable customer demand. The disagreement highlights competing views about how aggressively Canada should restrict imports while preserving affordable materials for manufacturers that use steel.

Cleveland-Cliffs Made Five-Year Employment Commitments When It Bought Stelco

The layoffs have become especially controversial because of promises made during Cleveland-Cliffs’ acquisition of Stelco. The American company announced the transaction in July 2024, assigning Stelco an enterprise value of approximately US$2.5 billion, equivalent to C$3.4 billion at the time. The acquisition was completed on November 1, 2024, following regulatory approval. Canada’s federal government reviewed the transaction under the Investment Canada Act and required binding commitments intended to protect jobs, investment and the long-term interests of Canadian communities.

Those commitments included maintaining Stelco’s head office in Hamilton, preserving existing collective agreements and employment benefits, making significant capital investments and continuing to employ at least the same number of unionized workers as when the takeover was announced. The undertakings were designed to remain in force for five years. Cleveland-Cliffs had also publicly emphasized its intention to preserve the Stelco name and maintain significant operations in Hamilton and Nanticoke. However, the legal dispute now centres on how those commitments apply when major market conditions change. Ottawa argues that the obligations remain enforceable, while Stelco maintains that extraordinary circumstances caused by tariffs and weakened demand must be considered when assessing compliance.

Ottawa Considers Legal Action and Even Government Ownership

Prime Minister Mark Carney has taken a confrontational position toward Cleveland-Cliffs, accusing the company of failing workers who were supposed to benefit from the foreign takeover. Following the September layoff announcement, Carney said the government intended to use its available legal powers to hold the American owner accountable. Industry Minister Mélanie Joly subsequently demanded an explanation of how Stelco planned to honour its employment commitments. The company’s response defended the reductions, arguing that continuing certain finishing operations would produce unsustainable losses and that external circumstances had fundamentally changed the market.

The dispute escalated further on October 16, when Joly said Ottawa was examining all available options under the Investment Canada Act, including the possibility of public ownership. She specifically referred to Section 40, which provides mechanisms for seeking enforcement of investment undertakings through the courts. Some political leaders and union representatives have urged the government to consider nationalization, but no takeover has been completed. Nor has a court established that Cleveland-Cliffs breached its commitments. The federal government faces a difficult decision: enforcing foreign investment protections while recognizing the genuine economic damage caused by tariffs and the challenges of sustaining manufacturing operations without sufficient demand.

Steelworkers Challenge the Company’s Explanation as Families Face Uncertainty

Union representatives have been particularly critical of Cleveland-Cliffs’ decision to blame the trade war for the layoffs. United Steelworkers Locals 1005 and 8782 argue that Goncalves has repeatedly supported American steel tariffs, including publicly claiming that he helped influence the decision to raise duties to 50%. In an October 1 statement, union leaders Ron Wells and John McElroy accused the company of contributing to the very trade conditions it now cites as justification for reducing Canadian employment. That remains the union’s allegation, while management argues the shutdown is necessary because the affected operations cannot compete profitably.

For workers, the dispute is about more than international trade policy. Wells has worked at the Hamilton steel mill for approximately 47 years, reflecting the deep employment connections that exist between the facility and surrounding communities. McElroy has warned that many steelworkers in Nanticoke are their families’ primary earners, making the prospect of layoffs particularly difficult. The Hamilton Steelworkers Power Centre organized employment and retraining information sessions on October 14 with employment-service organizations and federal support representatives. Such assistance can help workers manage the transition, but it does not replace stable industrial employment or eliminate uncertainty surrounding mortgages, household expenses and retirement planning.

Stelco’s Layoffs Reflect a Wider Crisis Across Ontario’s Steel Industry

The difficulties at Stelco are part of a much larger adjustment taking place across Canadian steelmaking. Algoma Steel in Sault Ste. Marie has announced plans affecting more than 1,000 positions, while ArcelorMittal’s Hamilton wire-drawing operations have also faced closure. Industry representatives say American tariffs are disrupting Canadian manufacturing supply chains, reducing demand not only for finished steel but also for products made by companies that purchase Canadian metal. When an automotive supplier loses American business, the effects can extend backward to steel mills, transportation firms and other local employers.

There are signs that Canadian producers are finding additional opportunities domestically. Reuters reported in October that Canadian steelmakers were increasingly targeting customers involved in mining, energy, infrastructure and data-centre construction. The share of Canadian steel production used domestically reportedly increased from approximately 41% in 2024 to 51% in 2025. Ottawa has also supported industry adjustment through financing initiatives, import restrictions and policies encouraging Canadian-made materials in major projects. Nevertheless, expanding domestic demand cannot immediately replace the size of the American market. For specialized products such as galvanized and cold-rolled steel, finding customers with the right technical requirements can be particularly challenging.

Recalling Workers Will Depend on Trade Policy, Market Demand and Government Action

Cleveland-Cliffs insists the layoffs need not become permanent. Goncalves has said affected Stelco workers could be recalled if Canada and the United States reach a steel trade agreement that restores commercially viable export opportunities. He has also suggested that stronger Canadian restrictions on imported galvanized steel could create sufficient demand to restart Hamilton’s finishing operations. During the October 19 earnings announcement, the company reiterated that affected employees would be brought back when market conditions improved. However, those statements are conditional promises rather than a confirmed reopening schedule or a guarantee that every position will return.

The next developments will depend on several decisions that remain unresolved. Ottawa must determine how to enforce Cleveland-Cliffs’ acquisition commitments, while the company must assess whether changing sales volumes justify restarting its idled production lines. Union representatives will continue pressing for employment protections, and Canada’s broader negotiations with Washington could reshape the economics of cross-border steel sales. The contrast remains striking: Cleveland-Cliffs is forecasting billions in potential future earnings while Canadian employees confront immediate job losses. For investors, the company’s October results represented a promising turnaround. For families in Hamilton and Nanticoke, the more important measure of recovery will be whether the workers receiving layoff notices eventually return to secure, well-paying jobs.

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