Algoma Swings to Profit, Begins Construction of EAF

All told, the company recorded net income of Canadian $123 million ($96.64 million) in its fiscal ’22 third quarter after posting a loss of $73.5 million ($57.8 million) in the same quarter last year on revenue that more than doubled year-over-year to $1.06 billion ($840 million).

Shipments were 552,554 tons in the third quarter of this year, up a comparatively modest 0.9% from 547,733 tons in the year-ago quarter, according to earnings data released after the close of markets on Thursday, Feb. 10.

The reason for the big gains in profits: “Continued record pricing for our products, the construct of our contracted order book, and solid execution by our employees,” Algoma CEO Michael McQuade said in a statement.

Hot-rolled coil prices have fallen rapidly since peaking in September at $1,955 per ton. But contract prices tend to lag spot prices by several months.

As for the EAFs, Algoma’s board approved construction of two in November. The new EAFs are expected to come online in 2024 and to replace the company’s blast furnaces and basic oxygen furnaces.

Algoma – which makes hot-rolled and cold-rolled coil as well as plate – currently makes liquid metal via the blast furnace route. That process relies on the carbon-intensive coking process. Metallurgical coal and coke batteries won’t be necessary once the company has new scrap-based EAFs up and running.

“We are driving the process that is expected to substantially increase our production capacity while dramatically reducing our carbon emissions,” McQuade said.

By Michael Cowden, Michael@SteelMarketUpdate.com