The Algoma Steel plant in Sault Ste. Marie, Ont., in April, 2025.Sean Kilpatrick/The Canadian Press
Algoma Steel Group Inc.’s new chief executive officer, Rajat Marwah, is confident that the company can successfully pivot its business by becoming a leaner steelmaker during a relentless trade war that shows few signs of letting up.
Algoma, based in Sault Ste. Marie, Ont., reported on Wednesday a net loss of $364.7-million for the quarter ending Dec. 31, bringing its full-year loss to almost $1-billion.
A year ago, U.S. President Donald Trump levelled 25-per-cent tariffs on steel imports into the U.S. In June, he jacked that up to 50 per cent.
Before the trade war began, the U.S. used to account for about 60 per cent of Algoma’s revenue. As the importer of record in the U.S., Algoma pays the tariff on any steel it sells into the country. Algoma last year incurred $225-million in tariff costs, representing a direct hit to its bottom line.
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Over the past nine months, the company has been winding down its business in the U.S. and selling more steel in Canada to try to stem its losses.
There are signs that the company is making some progress, although the path hasn’t been linear. While Algoma’s steel shipments plummeted 31 per cent year over year to 378,533 tonnes in the fourth quarter, it is increasingly selling more higher-margin plate than coil.
Because of the trade war, the domestic coil market in Canada has become oversupplied with many steelmakers vying for a limited pool of business. That dynamic has caused the price of most coil products in Canada to trade for as much as 40 per cent lower compared with the U.S., according to Mr. Marwah. However, margin compression is far less pronounced in the steel-plate market where Algoma is the only domestic manufacturer.
“We are not subject to the same oversupply dynamics that are compressing coil pricing,” Mr. Marwah said in a conference call with analysts on Thursday.
“Demand for plate products across infrastructure, construction and defence remains healthy, and we expect plate production to increase sequentially as our [electric arc furnace] ramps through 2026. This is exactly the market position we are leaning into.”
Mr. Marwah took over as CEO in January after the retirement of Michael Garcia, who ran the company for 3½ years. Mr. Marwah was previously the chief financial officer for Algoma.
Pivoting Algoma’s business to plate will take some time. In the fourth quarter of last year, plate accounted for 100,000 tonnes, or only about 26 per cent of its total steel shipments. But that is expected to change rapidly in 2026.
Michael Moraca, Algoma chief financial officer, said in the conference call that he expects plate to make up roughly 50 per cent of the company’s 1.2 million tonnes of steel shipments for the full year.
Crucial to Algoma’s plans to lean into plate production is the successful ramp up of its new electric furnaces. Last year, Algoma made the decision to accelerate by a year the rollout of its electric arc furnace technology. The first of those two EAFs went into production in July. The company said on Wednesday that the furnace is now running 24 hours a day, up from its earlier six-day-a-week schedule, and meeting quality expectations.
The EAFs replace the company’s century-old blast furnace and coke-oven technology, the last of which were decommissioned in January.
Canadian taxpayers are heavily invested in Algoma’s fortunes. In September, the company secured $500-million in low-interest federal and provincial loans that provided it with substantial liquidity to weather the trade war.
That was on top of several rounds of earlier funding. In 2019, Algoma received a government loan of $130-million to modernize its plate mill. Ottawa also provided the company with $200-million in loans in 2021 to build its electric furnaces, which are forgivable if Algoma meets certain emissions standards over time.
The federal government also last year heavily cracked down on imports of steel into Canada, imposing quotas and tariffs on countries it suspects of engaging in dumping, which is selling below cost in order to edge out local suppliers.
“The measures that the government is taking definitely is helping,” Mr. Marwah said. “We see a lot of inbounds coming from our customers and some new customers for steel, and that’s encouraging.”