Algoma Steel Group Inc. appears poised to miss the much-anticipated April startup of steel production from its new electric arc furnaces (EAFs), the company announced Tuesday.
The transition to next-generation steelmaking has been rescheduled to some time during its second quarter, which concludes at the end of June, Michael Garcia, chief executive officer, said in a news release.
"We now anticipate first steel production from our initial EAF during Q2, with no material change to our total project cost and our 2025 EAF production expectations,” Garcia said.
"The first quarter of 2025 was an intense period of activity at our site, set against a backdrop of ongoing market challenges.
"Our financial and operational results were broadly in line with expectations, despite headwinds from tariff uncertainty and subdued demand and pricing in the steel market.
"At the same time, we advanced construction on our transformative EAF project. While unusually harsh winter conditions delayed progress, we used the opportunity to advance other EAF project work not on the critical path.
"In parallel, we commissioned several critical systems, including the fume treatment plant and the water treatment plant, positioned the furnace itself, and energized the substation.
"We reach this milestone during a period of significant volatility in the North American steel market, with evolving U.S. tariffs — including those on Canadian steel and aluminum — adding uncertainty and driving increased imports into the Canadian market.
"Despite these challenges, we remain confident that our shift to EAF steelmaking will fundamentally improve our cost structure and enhance our resilience in turbulent market conditions."
The company received $50 million in insurance proceeds from its major piping collapse last year, but still posted a net loss of $24.5 million.
Also reported during the first quarter:
- first quarter operational results in-line with expectations
- consolidated revenue of $517.1 million, compared to $620.6 million in the prior-year quarter
- consolidated loss from operations of $139.9 million, compared to income from operations of $3.1 million in the prior-year quarter
- net loss of $24.5 million, compared to net income of $28.0 million in the prior-year quarter
- adjusted EBITDA loss of $46.7 million and adjusted EBITDA margin of (9.0 per cent), compared to adjusted EBITDA of $41.5 million and 6.7 per cent in the prior-year quarter
- cash generated by operating activities of $92.1 million, compared to $121.2 million in the prior-year quarter
- shipments of 469,731 tons, compared to 450,966 tons in the prior-year quarter
- paid quarterly dividend of US$0.05/share
The loss from operations was $139.9 million, attributed mostly to tariff costs and higher cost of natural gas and electric power.
During the first quarter of 2025, tariff costs totalled $10.5 million.
"The currently imposed tariffs and the ongoing threat of sustained and/or additional tariffs has contributed to volatility in steel demand and pricing in both the U.S. and Canadian markets, with concerns over supply chain disruptions leading to fluctuations in purchasing patterns," said tonight's news release from the company.
"Additionally, uncertainty surrounding trade policies has impacted the U.S. dollar exchange rate, which in turn affects the company's sales and cost structure by influencing raw material costs, pricing competitiveness, and cross-border trade dynamics.
"In many cases, it is not feasible to pass on the tariff cost to customers. Unlike the U.S. market, which is predominantly contract-based, the Canadian steel market operates largely on spot transactions.
"Over recent months, an increasing imbalance in demand and pricing has emerged between the U.S. and Canadian markets, with Canadian transactional pricing falling below U.S. pricing.
"This trend is believed to be driven by oversupply in the Canadian market from domestic producers and an increase in import offers from other countries priced below prevailing domestic levels.
"To the extent U.S. tariffs have, and may continue to, impact export sales, contribute to oversupply in the Canadian market, result in reduced transactional pricing, or lead to retaliatory tariffs on U.S. imports into Canada — or otherwise cause increases in input prices or reduced availability of inputs in Canada — the company's ability to maintain its current cost structure or level of operations may be materially and adversely affected.
"This may result in reduced production levels, higher costs, and lower operating margins, any of which could have a material adverse effect on the company's financial position, results of operations, and liquidity."