Heat Treat Industry News

November 13, 2009

Essar Steel continues to bleed: loses $123M in Q2

Essar Steel Algoma Inc. remains in the grips of akness in the global economy.

Wednesday, the Sault Ste. Marie steelmaker declared a nearly $123-million loss for the second quarter of fiscal 2009- 2010, a three-month period running July 1 through Sept. 30.

Essar Algoma, which sustained its fourth consecutive three-month financial loss, has lost $265 million through the first half of the fiscal year.

The net loss for the quarter -- $122.8 million -- is unofficially the second-largest three-month financial loss in the 107-year history of steel manufacturing in the Sault, surpassed by only the $143 million loss in the first quarter, April 1 through June 30.

Even during the darkest moments of its most recent restructuring, when then Algoma Steel Inc. bled $393 million in 2001, the worst three-month setback was a $116-million Q4 loss.

Company officials say the loss is primarily attributable to lower steel prices, the impact of a nearly $72 million foreign exchange loss, and blast furnace failure late in the quarter.

"We have weathered these challenging economic conditions and we will continue to focus on positioning the company to take advantage of future improvements in the steel markets," said Armado Plastino, Essar Algoma's chief executive officer, in a statement.

The six-month numbers include 1.05 million tons of shipments valued at $636.6 million, a decrease of nearly 490,000 tons and $975 million in values.

Average net sales realization for the period, at $528 a ton, excluding freight, according to company documents, is running at about half the values of a year ago, down $449.

The nearly $72-million foreign exchange loss, a $114 million swing compared to a more than $42 million foreign exchange gain a year earlier, reflects the effect of U. S. dollar exchange rate fluctuations on the company's Canadian dollar-denominated monetary assets and liabilities.

The company's lone operational blast furnace, No. 7, one of the largest iron-smelting facilities in North America, was out of service for the final week of the quarter as well as about three weeks of the current quarter.

Posted By DAN BELLEROSE, THE SAULT STAR

SOURCE: http://saultstar.com/

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