Synopsis:
Algoma Steel, a prominent Canadian steel producer, anticipates a rebound in its fiscal performance following challenges in the third quarter. Seasonal maintenance, UAW strike repercussions, and pricing fluctuations impacted Q3 results. Despite these hurdles, progress on their Electric Arc Furnace project remained on track. The company foresees improved pricing dynamics and market fundamentals to steer better results in the upcoming quarters.
Article:
Algoma Steel Group Inc, a leading Canadian steel manufacturer, has provided guidance for its fiscal third quarter ending December 31, 2023. The company expects total steel shipments of approximately 515,000 metric tons during this period. However, Adjusted EBITDA is projected to fall within the range of $(10) million to breakeven.
Michael Garcia, Algoma’s Chief Executive Officer, highlighted the company's performance during the fiscal third quarter. Operations remained in line with expectations despite substantial focus on seasonal maintenance, including the annual basic oxygen furnace relining and other essential servicing across the steelworks. Challenges stemming from UAW strike-driven soft demand and pricing in the previous quarter affected the Q3 results.
However, Garcia expressed optimism regarding ongoing developments. Progress on the Electric Arc Furnace (EAF) project progressed as planned and within budget. As the quarter concluded, approximately 86% of the project's total expected cost had been committed and priced based on the initial project budget.
In the market landscape, Algoma observed a positive turn in steel pricing in October, preluding a strike settlement. Post-strike resolution, pricing trends continued to improve, reaching near 12-month highs. Garcia expects this pricing resurgence, combined with robust market fundamentals, to drive better realized pricing and overall fiscal results starting from the upcoming fiscal fourth quarter.
Conclusion:
Algoma Steel foresees a turnaround in its fiscal performance amid market dynamics, including the recovery of steel pricing and solid market fundamentals. Despite challenges in the third quarter, progress on strategic projects and optimistic market trends position the company for improved results in the upcoming quarters.
