Canada's Algoma Steel Under Pressure

Since President Trump was elected, Algoma Steel's share price has fallen by 0% (from $0.00 on Nov 7, 2024 to $0.00 by market close on Jun 10, 2025).

Algoma Steel, based in Sault Ste. Marie, Ontario, is one of Canada's largest steel producers. Prior to Trump's election win, Algoma Steel had a valuation above its book value (Price/Book = 0.00 on Nov 7, 2024) and generated $2.5B CAD in revenue in 2024 with a slightly positive adjusted EBITDA of $22.3M CAD.

Valuation Snapshot (USD)

Since Trump was elected, Algoma Steel's share price and market cap have fallen by 0%, while its Price/Book ratio has fallen to 0.00. In other words, the market is valuing Algoma at only 0% of the value of its net assets (e.g., cash, inventory, equipment).

In the first quarter ended Mar 31, 2025, Algoma Steel reported a 4.2% increase in steel shipments (relative to the same quarter in 2024), but a 16.7% decrease in revenue due to lower steel prices.

Moreover, S&P Global announced on Jun 6, 2025 that Algoma Steel will be removed from the S&P/TSX Composite Index prior to market open on Jun 23.

U.S.'s Nucor

In contrast, U.S. steel giant Nucor saw its share price pop by 10% to $120.40 by market close on Jun 2, 2025, the first full trading day after President Trump announced the increase in steel tariffs to 50%.

On the same day, BMO Capital Markets upgraded Nucor's rating to “Outperform,” citing its “long-term growth potential” given the “recently announced U.S. steel tariffs.”

This upgrade by BMO Capital Markets notes Nucor's “compelling valuation,” despite its market cap of US$27.8B on Jun 2 (54x larger than Algoma Steel's US$518M market cap on Jun 2) and 1.40 Price/Book ratio (3x higher than Algoma Steel's 0.48 Price/Book ratio on Jun 2).

In Nucor's first quarter earnings report released on Apr 28, 2025, executives gave a positive outlook for the upcoming quarter:

Earnings in the second quarter of 2025 are expected to increase across all three of our operating segments, with the largest increase in the steel mills segment. The expected increase in the steel mills segment earnings is primarily due to higher average selling prices at our sheet and plate mills.

U.S. Steel Tariffs and Prices

Steel producers' earnings, much like other commodity producers (e.g., lumber, oil), are heavily dependent on the market price of their commodity. The U.S. Hot-Rolled Coil Steel Futures (expiring in July 2025) closed at $815 on Friday, Feb 7, 2025. During Super Bowl Sunday (Feb 9), Trump hinted there would be a 25% tariff put on steel and aluminum. Futures contracts for U.S. Hot-Rolled Coil Steel opened at $825 the next morning, and by market close on Mon, Feb 10, after Trump confirmed with the media that 25% steel and aluminum tariffs would be imposed on all countries, U.S. Hot-Rolled Coil Steel Futures had increased by 4.4% to $861. U.S. steel futures continued to climb for another 10 days, reaching a local peak of $907 on Feb 20, 2025.

U.S. Hot-Rolled Coil Steel futures prices (expiring in July) then declined steadily from their peak of $907 on Feb 20, reaching a low of $779 on Apr 9. U.S. steel futures traded sideways for the next two months, until Trump announced the increase in steel tariffs to 50% on May 30. The U.S. Hot-Rolled Coil Steel futures prices (expiring in July) opened at $805 on May 30, then jumped to $933 on Jun 2 (the closing price on the first trading day following Trump's announcement). Over the past several trading days, the U.S. steel futures prices have oscillated at this new higher level between $892 and $933, closing at $927 on Jun 10 (13.7% higher than the closing price on Feb 7, the Friday before Trump announced the 25% steel tariffs).

Historically, Canada and U.S. steel prices have been very similar, but since Trump announced the 25% steel tariffs on Feb 9-10, MEPS (a steel market analysis firm) reported that Canadian steel prices have decoupled from the U.S.

In October 2024, US hot rolled coil prices were USD772 per tonne compared with USD776 per tonne in Canada. By March, US prices were 38% higher. MEPS respondents say that, initially, Canadian mills have been forced to “eat” the 25% tariff.

The Canadian Steel Industry

In this Power & Politics clip, host David Cochrane asks the U.S. Ambassador to Canada a pointed question about where the U.S.-Canada relations are, given the tensions over the past few months.

David Cochrane packs a handful of critical facts into his question:

1. At least 700[1] Canadian steel workers have lost their jobs already because of the tariffs
2. The industry warns thousands more jobs in the steel sector are at risk
3. Algoma Steel sends more than 50% of its product into the U.S.
4. The 50% steel tariff is in place because of a national security threat
5. The steel industry in Sault Ste. Marie is very unlikely to be a security threat

To add to David Cochrane's last point, the steel industry has been in Sault Ste. Marie for over a century (Algoma Steel was founded in Sault Ste. Marie, Ontario in 1901). As you can see in the map below, Sault Ste. Marie, Ontario (population 78,574) is located across the St. Mary's River from its twin city, Sault Ste. Marie, Michigan (population 13,288).

The twin cities are connected by the Sault Ste. Marie International Bridge, which is operated under the direction of a bi-national governing body of four directors appointed by the governor of Michigan and four directors appointed by the government of Canada. The bridge opened in 1962, its 100 millionth crossing occurred on March 1, 2018, and there's an annual International Bridge Walk held every year since 1987, celebrating the friendship between the two Saults and both countries.

What does it all mean?

This exemplifies why so many Canadians say they feel betrayed. Over one hundred years of friendship and cooperation between the people living in the twin cities of Sault Ste. Marie, Ontario and Sault Ste. Marie, Michigan have been shattered by President Trump's favourite word in the English language: Tariffs.

Recall that Trump's plan, when it comes to Canada, is to use economic force to make Canada the 51st state.

For the record, here are the other 27 times Trump has threatened to annex Canada.

Where do we go from here?

It's hard to say what will happen next. Apparently, Prime Minister Mark Carney has held off on retaliating against the U.S.'s increased 50% steel tariffs because he's in intensive discussions with President Trump on the new economic and security partnership. Depending on how negotiations go, I see a few possible scenarios for tariffs facing Canadian steelmakers:

1. The tariffs are maintained at 50% (no exceptions)
2. The tariffs are reduced to 25% (same exception the U.K. received)
3. The tariffs are reduced to 10% (same as baseline “reciprocal” tariffs and Canadian energy tariff rate)
4. The tariffs are reduced/removed for a certain volume of steel production (as Bloomberg reported yesterday, might be in the works for the U.S.-Mexico deal)
5. The tariffs are removed altogether (seems like a fairy tale, but who knows?)

Assuming any U.S. tariff rate on Canadian-made steel remains, thousands of Canadians working in the steel industry will be at risk of losing their jobs. For Algoma, they must quickly find new customers in Canada, Europe, Asia, etc. to replace the American customers they lose (or have already lost). But multinational companies also employ thousands of Canadian steel workers. As it turns out, Nucor employs somewhere between 75 and 300 people based in Canada (about 1-4% of their 8000 employees on LinkedIn). The hope is that Nucor's Canadian steel mills continue operating at regular levels. Maybe their customers are all in Canada already. But a 50% tariff on all Canadian-made steel essentially cuts off the U.S. market, even for Nucor's Canadian mills. Of course, Nucor as a company is still net ahead, but Nucor's employees in Canada could get left behind.

How should Canadians respond?

In the best case scenario, steel tariffs are completely removed tomorrow. This would stop (or significantly slow) the bleeding. But wounds would remain.

And what if the steel tariffs aren't completely removed tomorrow?

When I'm unsure how to respond, I go back to why I started USAboycott.ca.

I'm boycotting U.S. products and services until the U.S. government reinstates free and fair trade in North America, and stops threatening to annex Canada.

When I compare my mission statement to where we're at today—a 50% tariff on Canadian-made steel that could remake the city of Sault Ste. Marie, Ontario into a “postindustrial community” (according to its mayor); and, a 14 day hiatus since Trump last threatened to annex Canada—I quickly regain my conviction to boycott the States.

How about you?

#ElbowsUp

Footnotes

1. David Cochrane said, “at least 700 Canadian steel workers have lost their jobs already.” Since then, ArcelorMittal said it's closing its Hamilton steel mill, laying off 153 workers, which increases the count to 850+.