Steel Mills

Algoma: Supply Chain Snarls, Covid Will Ding Fiscal Q4 Shipments

Written by Michael Cowden

March 27, 2022

Algoma Steel Group Inc. expects modestly lower shipments and production volumes in its fiscal fourth quarter because of supply chain bottlenecks and the ongoing impact of the Covid-19 pandemic.

The Sault Ste. Marie, Ontario-based steelmaker forecasts shipments of 540,000-550,000 tons in the fourth quarter and adjusted EBITDA of CAD $310 million to $320 million (USD $255 million to $274 million).

Algoma

One example of the logistics challenges facing the Canadian flat-rolled producer: the work stoppage at Canadian Pacific (CP) Railway. CP and the Teamsters union made a deal after workers were off the job – and train service halted – for two days.

But Algoma still expects “some adverse impact” in the fourth quarter because it had prepared for a potentially lengthy outage in rail service. The company now predicts that it will end the quarter with “above average” work in process and finished goods inventories.

The steelmaker took such temporary setbacks in stride. “The company continues to generate significant cash flow and remains confident in its cash generating potential in fiscal 2023 and beyond,” it said in a press release last week.

Algoma – which makes hot-rolled and cold-rolled coil as well as plate – is an important supplier not only to Canada but also to the US, notably to the Upper Midwest as well as along the Great Lakes Basin.

By Michael Cowden, Michael@SteelMarketUpdate.com

Michael Cowden

Michael Cowden is editor-in-chief for Steel Market Update. Cowden has covered the steel industry since 2007. He specializes in flat-rolled steel but has also reported on steel long products, steel pipe and tube, and aluminum. Before joining SMU, Cowden held reporting jobs at Fastmarkets AMM in Chicago, the Associated Press in Pittsburgh, and the Cambodia Daily in Phnom Penh. He has also worked as a copy editor and in marketing at the University of Chicago Press. Cowden has a BA in English from the University of Chicago and an MSJ journalism from Northwestern University’s Medill School of Journalism. Contact him at michael@steelmarketupdate.com or 724-759-7872.

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