Cleveland-Cliffs initiated with a Buy at Jefferies

Jefferies initiated coverage of Cleveland-Cliffs with a Buy rating and $22 price target. The macro backdrop for the metals and mining sector has improved, mostly due to the resilience of the U.S. economy and potential for a metals-intensive fixed asset investment cycle in the U.S., the analyst tells investors in a research note. The firm says that while base metals miners should benefit from this improving demand outlook, U.S. steel producers may be the biggest beneficiaries due to emerging steel “megatrends.” Jefferies put Buy ratings on Cleveland Cliffs (CLF) and US Steel (X) to reflect structural shifts in the U.S. steel markets. It put Hold ratings on Nucor (NUE) and Steel Dynamics (STLD) based on relative valuations, but expects the companies to benefit from longer-term structural shifts in the sector. The firm’s overall positive view on the space is predicated on a “soft (or no) landing” in the U.S., noting steel is still highly cyclical.