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Amid concerns about large North American inventories of unshipped steel, Algoma Steel Group Inc.'s share price has dropped to the lowest levels since they were listed three months ago on the Nasdaq Stock Market and Toronto Stock Exchange.
At close of markets on Tuesday, common shares of the Sault steelmaker (ASTL) were trading at $10.38 on TSX and US$8.35 on Nasdaq.
At one point on Tuesday, the stock reached all-time lows of $10.13 (TSX) and US$8.00 (Nasdaq).
Trading at more than $14 on TSX as recently as Jan. 5, ASTL's latest decline started on Thursday afternoon near the time when Bloomberg's Joe Deaux quoted the chief executive officer of a rival Canadian steel firm who compared the North American steel market to a "falling knife."
"It's pretty clear what's happening," Stelco CEO Alan Kestenbaum told Bloomberg.
"Significant oversupply and significant shrinkage of demand right now and you're seeing it in the inventory numbers," he said.
"Thanks for the opportunity," Brenda Stenta, Algoma's manager of communications and branding, told SooToday on Tuesday, responding to our request for information about the company's strategy for dealing with the inevitable and ongoing cyclicities of the steel business.
"It would be inappropriate for us to comment at this time as we are in a blackout period following the close of the third quarter," Stenta told us.
Algoma's third quarter ended Dec. 31.
Blackout periods coinciding with the end of fiscal quarters are usually lifted shortly after earnings are made public.
A fiscal update released by Algoma CEO Michael McQuade two weeks ago may provide some additional context.
"Our steel inventory has increased, and we expect to ship these deferred tons over the next two fiscal quarters," McQuade said.
Planned shipments were 40,000 to 60,000 tons lower than expected, he said.
"Actual shipments were impacted by various issues including increased holiday shutdowns by customers, logistical supply chain constraints, and COVID-related challenges."
"Algoma’s high percentage of contract business offers stability during periods of volatility and this, combined with the strong demand and improving pricing we are seeing for our plate products, has positioned us well to continue delivering strong results to our shareholders.”
"We were pleased with the company’s performance during the quarter, with expected financial results in line with our previous fiscal third quarter," McQuade said.