Bureaucratic Buffering Bedevils Bold Breakthroughs

Algoma Steel’s journey toward lower-cost green steel reached a turning point as it achieved its first arc & first steel from its transformative electric arc furnace, Volta™, in early July. This technological pivot, long in planning, is designed to cut CO₂ emissions & modernise legacy production methods. “This milestone marks the true beginning of our transition,” said CEO Michael Garcia. Yet, despite this breakthrough, Algoma still faced heavy regulatory & tariff burdens, paying $64.1M CAD in tariffs in Q2 2025, which deepened quarterly losses.

Economic Ebbs Expose Earnings Erosion

For Q2 2025, Algoma reported consolidated revenue of $589.7M CAD, down from $650.5M CAD a year earlier. Net loss stood at $110.6M CAD versus prior net income of $6.1M CAD. Adjusted EBITDA slipped into negative territory at -$32.4M CAD, reflecting a margin of -5.5%. “Persistent weak steel demand & tariff costs overshadowed operational progress,” noted CFO Mark Simmons. The drop in average realised steel prices, from $1,293 to $1,249 per ton, further eroded profitability despite lower freight expenses.

Industrial Inertia Intensifies Inflationary Impediments

In addition to tariffs, higher cost per ton of steel, rising from $1,069 to $1,144, strained margins. Shipment volumes also dropped to 472,056 metric tons from 503,152 metric tons. Analysts believe this downturn stems partly from Section 232 tariffs, which diverted cheaper foreign steel into Canada, putting downward pressure on domestic prices. “Tariffs are double-edged, they shield some producers but inflate costs for others,” observed metals analyst Priya Deshmukh.

Tariff Troubles Tarnish Trade Trajectory

Tariffs remained a central challenge in Q2, costing Algoma $64.1M CAD versus nil in the prior-year quarter. The firm attributed lower export sales & domestic price depression to these levies. “Tariff volatility adds complexity to planning & pricing,” stated trade economist Daniel Leclerc. Combined with weaker global steel demand, these costs contributed to a net operational loss of $85.1M CAD, widening from $12.5M CAD the prior year.

Market Malaise Meets Manufacturing Metamorphosis

Even as volumes declined, the Volta™ EAF launch brings strategic promise. Shipments are expected to stabilise as demand recovers, though global macro uncertainty continues. “While we can’t control market volatility, we control execution,” Garcia emphasised. The EAF’s first steel production in July validates

Fiscal Fortitude Fuels Forward Focus

Amid challenging metrics, Algoma prioritised its EAF project to secure structural cost advantages. Revenue per ton, net of freight & non-steel revenue, stood at $1,132 versus $1,187 a year prior, while cost control measures partially offset market-driven declines. Garcia reaffirmed, “We remain focused on safe operations & transformation completion, creating lasting value for stakeholders.”

ASTL:Nasdaq

• Current Price: C$5.85, down $0.28 (~–4.6%)

• RSI: 41.17 → Neutral

• MACD: 0.03 → Buy

• Moving averages (MA5, MA10, MA20, MA50, MA200 except MA100): majority are Sell, except MA100 → Buy.

• Consensus: Overall Sell, despite a few buy signals

Support & Resistance Levels

• Pivot: $6.24

• Resistance Zones: R1 ~$6.50, R2 $6.70, R3 $6.99

• Support Zones: S1 $5.75, S2 $5.49, S3 $5.00

Key Takeaways

• Algoma Steel reported a Q2 2025 net loss of $110.6M CAD, driven by tariffs & soft market demand.

• Achieved first arc & first steel production in July from transformative Volta™ electric arc furnace project.

• Despite near-term losses, the EAF marks a pivot toward low-cost, lower-carbon green steel.