Algoma Steel’s first electric arc furnace (EAF) is up and running, but the impact of U.S. tariffs on Canadian steel is delivering a beating to the Sault Ste. Marie steelmaker’s bottom line.
The 120-year-old sheet and plate producer posted a net loss of $110.6 million for its second quarter, a considerable jump from the $24.5 million loss recorded in the first quarter as the weight of the Trump administration’s protectionist trade policy starts to take hold.
U.S. tariffs on imported Canadian steel, weakening steel demand, and lower pricing are being blamed for the company’s financial performance. Algoma ships more than half of its production volume to U.S. customers.
Algoma said it’s paid $64.1 million in tariffs during the quarter and $74.6 million in total through the first half of 2025.
Since Algoma is classified as an importer of record in the U.S., it’s responsible for paying the tariff on the plate and coiled steel it ships across the border.
In his July 29 remarks in a news release, Algoma CEO Michael Garcia focussed on the success in firing up its first electric furnace earlier this month, calling it a “historical accomplishment” for the company in making the transition this year from blast furnace steelmaking toward ‘green’ steel production.
The first of two furnaces in the $881-million project began commercial production on July 10. The second will enter production by year’s end.
“While we can’t control market volatility and macro or geopolitical uncertainties,” said Garcia, “we are focused on what we can control: the safe operation of our assets and the completion of the EAF project, which provides us with a structural cost advantage that will serve us well through market cycles, creating lasting value for all stakeholders.”
At quarter’s end, the company had cash on hand of $82.5 million with $329.1 million remaining in a revolving credit facility. But liquidity is a real concern and Algoma said it’s exploring ways and funding programs to support plant operations and buy time to secure non-U.S. customers in various industry sectors.
The company said it’s in discussions with Ottawa in seeking $500 million in relief through the federal Large Enterprise Tariff Loan while pursuing clients, domestically, in sectors such as defense and construction.
Second quarter revenue totalled $589.7 million. Consolidated loss from operations were $85.1 million.
Steel shipments during the quarter amounted 472,056 tons compared to 503,152 tons during the same time last year.
Algoma’s shipments to the U.S. for the first and second quarters represented 54 per cent and 53 per cent, respectively, of its total volumes.
U.S. tariffs on Canadian steel imports were on and off again during March with a 25 per cent duty on steel and aluminum. As of early June, U.S. tariffs increased to 50 per cent.
With volatility all around, Algoma’s board of directors decided to suspend the regularly quarterly dividend on common companies, totalling US$5.2 million. Algoma said its cash cautious approach to preserve liquidity and ensure it has financially flexibility amid uncertain times.
Algoma is Canada’s only independently owned primary steel producer. ArcelorMittal Dofasco and Stelco, both in Hamilton, are foreign owned.
