Steel Mills
Algoma Swings to Loss in Q3, Upbeat About '23 on Higher Prices
February 14, 2023
Algoma Steel said lower production volumes and steel selling prices, as well as the jump in the price of key inputs, hit its fiscal Q3 earnings as the company swung to a loss.
The Sault Ste. Marie, Ontario-based steelmaker posted a net loss of Canadian $69.8 million ($52.3 million USD) in its 3Q ended Dec. 31 vs. net income of C$123.0 million a year earlier on revenue that slid 47% to C$567.8 million.
Specifically, the company cited the higher prices of metallurgical coke, natural gas, alloys, and scrap compared with the previous year.
Algoma reported steel shipments of 458,341 tons in its 3Q, down 17% from 552,544 tons in the same quarter a year earlier. The company blamed the decrease in shipments on a previously disclosed plate mill modernization commissioning and additional maintenance delays.
Commenting on the loss, CEO Michael Garcia said he’s been disappointed by production and shipment levels in the last two quarters.
“As such, my management team and I have been laser-focused on rectifying these shortfalls,” he said in a statement. “We believe the challenges experienced over the prior quarters are now largely behind us, and our facilities are returning to normal production levels.”
Garcia said, as reported at SMU’s Tampa Steel Conference, that Algoma’s transition from integrated to electric-arc furnace (EAF) steelmaking remains “on time and on budget.”
For the C$700-million project, a cumulative total of approximately C$220 million has been spent as of Dec. 31. EAF startup is expected to occur in mid-2024, the company said.
The EAF steelmaking facility is designed to have an annual raw steel production capacity of approximately 3.7 million tons, which matches its downstream finishing capacity, Algoma said.
Garcia noted that some bright spots are the recent rebound in North American hot-rolled coil steel prices and strong plate pricing.
“We expect calendar 2023 to be more in line with our historical production levels,” Garcia said. “Our transformation to electric-arc steelmaking is progressing as expected and we will maintain our relentless focus on creating long-term value for all of our stakeholders.”
By Ethan Bernard, ethan@steelmarketupdate.com
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