The chief executive of Algoma Steel, Rajat Marwah, has announced that the company is intensifying its focus on the Canadian market due to the challenges posed by U.S. tariffs, which have negatively impacted its shipments to the U.S. In the second quarter, Algoma Steel incurred $18.7 million in direct tariff costs, a significant reduction from $64.1 million during the same period last year, largely attributed to a decrease in exports to the U.S.
Marwah highlighted that the 50 percent U.S. Section 232 tariff on steel imports from Canada significantly shapes the operational environment for Algoma Steel. The company reported a total shipment of approximately 181,500 tons in the second quarter, reflecting a 62 percent decline year-over-year. Shipments to the U.S. were particularly affected, accounting for only 23 percent of total shipments, down from 54 percent the previous year, and falling short of the historical range of 45 to 55 percent.
As a result of these challenges, Algoma's shares dipped by about 10 percent on the Toronto Stock Exchange, closing at $5.35 on Thursday. In response to the evolving market conditions, Algoma is continuing its transition to electric arc furnace steelmaking and is shifting its production focus towards steel plates, while scaling back on steel coil production, which is currently in oversupply in Canada.
During the second quarter, plate shipments reached approximately 125,000 tons, an increase from 116,000 tons in the first quarter. Marwah expressed confidence in the ongoing ramp-up of plate production, anticipating continued growth through 2026 as Algoma aims to solidify its position as a vital supplier within Canada’s defense sector.
However, the company faced a setback when its memorandum of understanding with Hanwha Ocean Co., Ltd. regarding Canada’s future submarine program was suspended, following the federal government's decision to select Thyssenkrupp Marine Systems as the preferred supplier for Canada's next submarine fleet. Despite this development, Marwah affirmed that Algoma's strategic focus on structural steel beams remains unchanged, emphasizing the availability of opportunities in that market.
Moreover, Algoma recently announced a partnership with defense manufacturer Roshel Inc. to establish Roshel Algoma Defence, which Marwah described as a “strategic pillar” in Canada’s defense supply chain. This alliance further reinforces Algoma's commitment to play a significant role in the country's defense sector.
Financially, Algoma reported a net loss of $96 million for the second quarter, an improvement from the net loss of $110.6 million recorded in the same quarter last year. The loss per diluted share was reported at 88 cents, compared to a net loss of $1.02 per diluted share the previous year.
