Algoma Profits Up on Higher Steel Prices, Despite Higher Costs

“The momentum we established in fiscal 2022 continued with another quarter of strong results in what has been a volatile operational environment,” Algoma CEO Michael Garcia said in a statement released along with earnings figures.

All told, Algoma recorded net income of Canadian $301.4 million ($234.3 million USD) in its fiscal ’23 first quarter, up 48% from C$203.6 million ($158.2 million USD) in the year-ago quarter on sales that increased 18.4% to C$934.1 million ($726 million USD) over the same period.

Average steel sales prices were C$1,632 per ton ($1,268/ton USD) in Algoma’s fiscal Q1, up 37.7% from $1,185 per ton ($921/ton USD) in the same quarter last year.

The gains came despite shipments in Algoma’s fiscal Q1 tumbling to 537,524 tons, down 11.9% from 610,057 tons in the year-ago quarter. Company executives on a conference call with analysts on Thursday, Aug. 4, chalked the decline up in part to the plate mill outage.

Algoma makes hot-rolled and cold-rolled coil as well as plate.

The company also remains on track to start up two new electric arc furnaces—which will replace its current blast furnace, coke ovens and basic oxygen furnace—in 2024, Garcia said on the call.

Foundations for the dual EAFs are in place. And there are few hindrances for the footprint of the new equipment after a ¼ mile stretch of rail—which had been used to move hot metal—was rerouted, Garcia said.

Algoma executives said they could not disclose much additional detail about contract negotiations with United Steelworkers Local 2251, which represents hourly workers at the mill. The union nearly went on strike over the weekend. And Algoma had begun preparations to safely idle equipment, Garcia said.

The two sides then agreed to extend talks for another 15 days. And the mill is running as usual, he said.

By Michael Cowden, Michael@SteelMarketUpdate.com