TORONTO – Stelco Inc. â€” a theoretically insolvent producer that posted record first-quarter profits in a hot steel market â€” now warns that prices are weakening, changing its financial outlook.
Despite its return to prosperity, Stelco has remained under court protection for nearly 16 months. A court-appointed monitor reported on Thursday that the Hamilton-based company is concerned about the price situation.
“Stelco believes that market conditions for Stelco and other steel producers reflect high inventory levels which need to be reduced to strengthen customer demand. Because of these changing market conditions, Stelco is in the process of updating its financial projections.”
Over the past month, the price of hot rolled steel has fallen from about $575 (U.S.) a ton to less than $540, CP said.
Companies around the world rushed to expand steel production amid runaway demand from China as it became a global manufacturing power. Recently, however, prices of steel shares on U.S. and other markets have been hit by fear that the glory days are ending.
Separately, the Canadian Press reported that Ian Delaney, chairman of Sherritt International, has expressed “rapidly diminishing” interest in Stelco. Speaking to reporters after the resource company’s annual meeting in Toronto, Delaney said Sherritt had no plans to revive its offer for a restructuring of Stelco but will watch “from a distance.”