Algoma Steel’s loss deepens as tariffs hit as it struggles with pivot to Canadian market

Algoma Steel Inc. took a $364.7-million net loss in the fourth quarter as fallout from the United States' trade war with Canada landed a one-two punch. Photo by Sean Kilpatric

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Algoma Steel Inc. took a $364.7-million net loss in the fourth quarter as fallout from the United States’ trade war with Canada landed a one-two punch, racking up tariff expenses and cutting off sales in what had been its largest market.

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The U.S.’s 50 per cent tariff on Canadian steel meant the Sault Ste. Marie, Ont.-based company had to pay $60.6 million in direct tariff fees during the quarter and $225 million during the year.

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Shipments to the U.S. fell to 45 per cent of Algoma’s total transactions in the quarter.

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Algoma in 2025 said it would pivot to serving the Canadian market, but that meant it received lower prices for its products. Revenue for the quarter fell to $455 million, down 22 per cent year over year.

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“Canadian transactional pricing during the quarter was up to 40 per cent lower than comparable U.S. levels across many product categories, reducing revenue by approximately $27 million,” the company said in its earnings release.

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Algoma’s revenue in 2025 declined to $2 billion, down 15 per cent, and shipments declined to 1.74 million tons, down 14 per cent. It also posted a net loss for the second consecutive year in a row, losing $984.9 million in 2025 compared to $139 million in 2024.

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Despite the losses, the company remains solvent, and chief executive Rajat Marwah, who took over after Michael Garcia retired on Jan. 1, described the fourth quarter as a “pivotal moment.”

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The company had long planned to switch from making steel using a coal-fired blast furnace to an electric arc furnace (EAF), a transition that will lower its overall carbon emissions and give it more flexibility to match production with demand. It accelerated that transition by about two years to take place last year due to the U.S. tariffs.

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“Successfully producing high-quality sustainable steel from the EAF at scale represents a critical milestone in our multi-year transition and reinforces our confidence in the long-term benefits of the new operating platform,” Marwah said in a statement.

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In December, the company laid off more than 1,000 people, a result of its accelerated transition to the EAF, which was previously planned for 2027.

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Now, Algoma intends to focus on producing discrete plate — the only company in Canada to do so — and wind down its coil production.

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It expects to have an annual raw steel production capacity of approximately 3.7 million tons and for its annual carbon emissions to fall by approximately 70 per cent.

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Last year, Algoma secured a $500-million loan from the federal and provincial governments, which it said would support its “near-term financial flexibility.”

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In January, it announced a memorandum of understanding with South Korea’s Hanwha Ocean Co. Ltd., which would provide it with US$200 million toward the development of Canada’s first structural steel beam mill, plus US$50 million in anticipated product purchases. The agreement hinges on Hanwha winning a contract to build up to 12 submarines for the Canadian military.

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Algoma had $77.5 million in cash at the end of the fourth quarter, $194.5 million in unused availability under a revolving credit facility and $417 million available to draw from its federal and provincial loans.

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