Cleveland-Cliffs Stock of the Day Rare Earth Dreams Ignite

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•  20 Oct 2025
 

•   CLF  
   
  -15.77%

$CLF Cleveland-Cliffs is absolutely exploding higher today, with shares surging over 20 percent on massive volume exceeding 72 million shares, a jaw-dropping 619 percent increase from normal trading activity. This isn't your typical earnings reaction, and that's exactly what makes it so fascinating for traders right now.

The third-quarter numbers themselves were actually mixed. Cleveland-Cliffs posted an adjusted loss of 45 cents per share, which beat analyst expectations by 6.25 percent, but revenue missed estimates by 3.12 percent. The company also lowered its full-year capital expenditure outlook, which would normally be a red flag. So why is $CLF acting like it just struck gold? Because in many ways, it actually did.

The catalyst driving this incredible move is Cleveland-Cliffs announcement that it's expanding into rare earth element production. This isn't just a side project, it's a strategic pivot that could fundamentally transform the company from a traditional steelmaker into a critical player in America's push for supply chain independence. Rare earth elements are the lifeblood of electric vehicles, wind turbines, defense systems, and consumer electronics, and China currently controls about 90 percent of global refining capacity. That's a problem the US government is throwing billions of dollars at solving.

CEO Lourenco Goncalves, who has a track record of bold transformations, also expressed confidence about steel demand rebounding thanks to the new trade environment. Trade protection remains firmly in place for domestic steel producers, and $CLF stands to benefit from any reshoring trends or infrastructure spending that flows through the economy. But investors are clearly looking past the cyclical steel business today and focusing on the rare earth opportunity.

What makes this move logical rather than desperate is that Cleveland-Cliffs already operates extensive mining operations across the Great Lakes region. The company has the infrastructure, the workforce expertise, and the customer relationships, particularly with automakers who are simultaneously among its biggest steel buyers and fastest-growing consumers of rare earth elements. This isn't a random diversification, it's a natural extension of existing capabilities into a sector where domestic production carries both economic and geopolitical premiums.

The rare earth market is exploding as electrification accelerates and as governments prioritize supply chain security. Projects that might have struggled to compete with Chinese producers on pure economics alone are now attracting government loans, grants, and offtake agreements that dramatically improve the risk-reward profile. Cleveland-Cliffs could potentially benefit from these support mechanisms while leveraging its existing operational excellence.

From a trading perspective, the volume surge tells you everything you need to know about conviction. Over 72 million shares changing hands means institutional money is taking notice, not just retail enthusiasm. The question for anyone considering $CLF at current levels around $20.77 is whether this represents the beginning of a rerating or an overreaction to an announcement light on specific details.

The bull case is straightforward. You're getting a steel business that's finding a floor, protected by tariffs and positioned for any cyclical recovery, plus a call option on the domestic rare earth build-out backed by massive government support. The bear case is that rare earth processing requires enormous capital, technical expertise in complex metallurgy, and years of permitting, with no guarantee of economic returns even if the project succeeds.

Execution will be everything. Investors will demand concrete progress on permitting, technology partnerships, customer commitments, and detailed capital allocation plans. The market is pricing in significant optimism today, and that optimism could evaporate quickly if milestones slip or if the investment requirements balloon beyond expectations.

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