Algoma Steel (ASTL) Extends Iron Ore Contract for EAF Transition
Algoma Steel Group Inc. ASTL has announced a development in its ongoing efforts to shift towards more sustainable steel production methods. The Canadian steel producer, known for its hot and cold rolled steel sheet and plate products, has extended its iron ore purchase contract with United States Steel Corporation X for an additional two years. Importantly, Algoma retains the option to further extend this contract for a third year at its discretion.
This partnership extension with U.S. Steel is pivotal for Algoma as it advances its transformation journey toward electric arc furnace (EAF) steelmaking. The extended contract is expected to cover the iron ore volumes necessary to facilitate Algoma's transition from traditional blast furnace steelmaking to the more environmentally friendly EAF steel production method.
This extension aligns seamlessly with Algoma's commitment to embracing sustainable steel production methods. Moreover, this agreement solidifies a dependable supply chain and guarantees continuous access to crucial raw materials. This, in turn, ensures that Algoma remains capable of meeting its production capacity needs and effectively catering to its valued customers throughout North America.
The transition to EAF steelmaking is a significant step for Algoma in its commitment to reducing its carbon footprint and contributing to a greener, more sustainable future. This dedication to innovation and environmental stewardship underscores Algoma's commitment to leading the industry toward a low-carbon economy.
Algoma Steel’s shares have lost 3.2% in a year against a 44.2% rise of the industry.
Image Source: Zacks Investment Research
Algoma reported first-quarter fiscal 2024 earnings of 85 cents per share, a decrease from $1.49 in the same period last year. The company's quarterly revenues were $827.2 million, down approximately 11.4% year over year, with steel revenues declining by 14% to $754.5 million.
Shipments increased 5.9% to 569,433 tons. Algoma Steel made substantial progress on its EAF project, investing $341 million as of June 2023, representing around 40% of the total projected cost. The EAF project is expected to replace the existing blast furnace and basic oxygen steelmaking operations and be commissioned by the end of 2024, resulting in an annual raw steel production capacity of approximately 3.7 million tons, matching the company's downstream finishing capacity.
Algoma Steel Group Inc. Price and Consensus
Algoma Steel Group Inc. price-consensus-chart | Algoma Steel Group Inc. Quote
Zacks Rank & Key Picks
Algoma currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are WestRock Company WRK and Hawkins, Inc. HWKN, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The earnings estimate for Westrock’s current year is pegged at $3.02. In the past 60 days, WRK’s current-year earnings estimate has been revised upward by 29%. WRK beat the Zacks Consensus Estimate in three of the last four quarters, with the average earnings surprise being 30.7%. The company’s shares have rallied 8.7% in the past year.
The consensus estimate for Hawkins’ current-year earnings is pegged at $3.40, indicating year-over-year growth of 18.9%. In the past 60 days, HWKN’s current-year earnings estimate has been revised upward by 32.3%. HWKN beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 25.6%. The company’s shares have rallied 51.7% in the past year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
United States Steel Corporation (X) : Free Stock Analysis Report
WestRock Company (WRK) : Free Stock Analysis Report
Hawkins, Inc. (HWKN) : Free Stock Analysis Report
Algoma Steel Group Inc. (ASTL) : Free Stock Analysis Report
