December 02, 2008

Novamerican foresees rebounding steel prices in Q4

Novamerican announced that during June to August 2007 quarter it earned USD 7.4 million down from USD 11.5 million in June to August 2006 quarter. It added that its net sales were USD 191.5 million during the June to August 2007 quarter down by 9% YoY from USD 211.3 million in the year ago period

Novamerican said that its “Sales volumes shrank due to longer than expected summer shutdowns, particularly in the automotive sector and the continued industry wide reductions of excess inventories. As a result, steel prices continued to decrease during the summer months, albeit at a slower rate than in May and June."

Novamerican management however said that "Management believes that the bottom of the current steel price cycle occurred in August. Recently announced price increases in steel coil and structural tubing should benefit the company in its fiscal fourth quarter."

Novamerican also pointed to trade action to reduce unfairly subsidized pipe imports from China and said the weakening of the US dollar will increase foreign demand for North American steel and make it harder for imports to compete.

Novamerican is a maker of steel tubing and other processed metal products with 11 plants in Ontario and Quebec and 11 in the United States.