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Essar Steel Algoma posts another quarterly loss

Keywords: Tags  Essar Steel Algoma, steel sheet, steel plate, flat-rolled steel, earnings, Chris Prentice

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 said.

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 steelmaker’s 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 increase.

"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 company’s 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 analysis.

"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."

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