Algoma Expects Q3 Earns Dip on Soft Prices, Lower Plate Shipments

“The sequential decrease in steel shipments and adjusted EBITDA as compared to the fiscal second quarter 2023 is largely due to lower-than-expected plate shipments, continued softening in steel pricing, and normal seasonal maintenance activities ahead of winter,” Algoma CEO Michael Garcia said in an earnings guidance statement.

These subjects were also discussed in the company’s most recent earnings call on Nov. 8. Algoma posted adjusted EBITDA of C$82.7 million in its fiscal Q2 ended Sept. 30, on shipments of 435,202 tons.

Garcia continued that, “Despite a return to more typical levels of unfinished plate production, total plate shipments were adversely impacted by temporary downstream finishing constraints as we ramped up plate production.”

The CEO said the company expects to produce adjusted EBITDA of C$395 million to C$405 million ($294 million to $301 million USD) for the first nine months of its fiscal 2023.

“I am pleased that the plate mill has resumed normal production levels. We expect to return to more normalized shipments in calendar 2023, and to apply the lessons learned during phase one of the plate mill modernization to our future capital projects,” Garcia said.  

He noted that Algoma remains focused on completion of its electric-arc furnace project, which is still on budget and on track to be producing steel in 2024.

The two new EAFs, approved in 2021, will replace Algoma’s blast furnaces and will have combined steelmaking capacity of 3.7 million tons per year.

By Ethan Bernard, Ethan@SteelMarketUpdate.com