Algoma Steel Group Inc. is hoping the federal government's growth projects will lead to more domestic demand for its products as it suspends its dividend and reported a drop in profit from tariff disruptions.
The Sault Ste. Marie-based steel producer says it suspended the dividend as a prudent way to preserve financial flexibility during ongoing macroeconomic uncertainty and the near-closure of its largest export market.
"The steel industry is experiencing unprecedented disruption as the tariff situation has significantly deteriorated since our last quarter, with the U.S. market now effectively closed to Canadian steel producers due to prohibitive 50 per cent tariffs," said chief executive Michael Garcia on an earnings call Wednesday.
Not only are tariffs directly disrupting business, but the wider uncertainty is also weighing on demand, he said.
"The combination of trade barriers and broader economic volatility has fundamentally altered market dynamics with customers across North America adjusting purchasing patterns and supply strategies in response to this unprecedented level of uncertainty and volatility."
The effects could be seen in the company's second-quarter results that showed a net loss of $110.6 million compared with net income of $6.1 million a year earlier.
Revenue during the quarter came in at $589.7 million, lower than $650.5 million the year before.
News of the profit fall and dividend cut helped send the company's stock down around seven per cent on the Toronto Stock Exchange as of early afternoon.
Algoma Steel says it paid $64.1 million in tariffs during the quarter, compared with none during the same period in 2024.
Shipments to the U.S. represented 54 per cent of total volume during the second quarter. The U.S. imposed 25 per cent tariffs on steel imports in March, raising that to 50 per cent in June.
Algoma has contracts and long-standing relationships with U.S. customers so it's still shipping some products south, said Garcia.
The company is however hoping to see a boost to domestic demand though opportunities in defence, infrastructure and clean manufacturing, said Garcia.
He said the company recently signed a memorandum of understanding with shipbuilder Seaspan to re-establish a steel supply chain, and is doing similar work in the defence industry.
"The groundwork is being laid. So that will be a driver of the opportunity for this volume into the future."
The company is also pushing for more direct federal support, including announcing last week it's asking for a $500 million loan to help maintain liquidity.
Garcia said talks with government on supports are ongoing and "very active" but declined to provide further details.
The federal government has also moved to increase tariffs on steel imports to Canada in an effort to protect the domestic industry.
The company is keeping the government up-to-date on the effectiveness of the measures and what else can be done to protect the industry, said Garcia.
"We are actively engaging with policy-makers to ensure that the strategic importance of Canadian steelmaking is recognized and supported."
During the quarter, the company also produced its first steel from its electric arc furnace as it shifts away from using blast furnaces. The move will both reduce emissions and costs, said Garcia.
"We are executing with purpose, completing our transition to low cost, low carbon steel production, expanding our relevance in strategic domestic sectors, and reinforcing our role as Canada's only independent primary steelmaker."
This report by The Canadian Press was first published July 30, 2025.
Companies in this story: (TSX:ASTL)
Ian Bickis, The Canadian Press
