NEW YORK Essar Steel
Algoma Inc. has posted its third consecutive quarterly loss due
to a combination of falling product prices, declining shipments
and rising costs.
The flat-rolled steel producer
reported a net loss of Canadian $88.4 million ($88.13 million)
for its fiscal second quarter ended Sept. 30 in contrast to net
income of $73.7 million in the same period last year on sales
that slid 27.1 percent to C$410.9 million ($409.61 million).
Sales volumes were down due to a weaker market and problems
with a new computer system, which "created problems with the
ability to generate proper shipping documentation," the company
Steel shipments during the
quarter totaled 548,110 tons, down 18.6 percent from a year
earlier, while the average net sales price fell 10.8 percent to
C$685 ($683) per ton.
Net sales of
steel sheet and strip products totaled C$304.2 million ($303.28
million) during the quarter, down 24.5 percent from the same
period in 2011, and net sales of plate products fell 37.9
percent to C$71.3 million ($71.09 million).
At the same time the
steelmakers profits declined, its cost per ton of steel
shipped rose 12.8 percent to C$695 ($693) per ton. The company
cited higher iron ore and coal prices as the main driver of the
"Though soft steel markets led
to a weaker financial performance, there were a number of
significant accomplishments in the quarter," chief executive
officer Kalyan Ghosh said, citing the companys safety
performance, its new management software and its new
C$350-million ($348.92-million) term loan agreement. "These
initiatives, combined with continued cost-reduction efforts,
bode well for improved performance in the next quarter."
But a surge of imported plate
could put that improvement at risk, the Sault Ste. Marie,
Ontario-based company said in its management discussion and
"The company is very concerned
about the surge of rolled plate imported into Canada over the
past several months," Essar Steel Algoma said. "Significant
quantities of low-priced imports from Brazil, Italy, Russia,
South Korea, Turkey and other countries have resulted in lost
sales and reduced prices in the market. The company is
considering filing a trade complaint covering these low-priced
and possibly dumped imports."