Rating affirmation and outlook
S&P Global Ratings affirmed Algoma Steel Inc.’s issuer credit rating at CCC+ on 17‑06‑2026 and changed the outlook to stable from developing. The agency also reaffirmed the company’s B‑ issue‑level rating on its senior secured second‑lien notes due 2029.
Market context
Algoma operates in a challenging environment, facing a 50% U.S. steel tariff on Canadian imports and domestic oversupply, which pressure volumes and pricing.
Recent financial performance
For the twelve months ended 31 March 2026, Algoma reported an adjusted EBITDA of negative C$450 million. S&P projects a negative EBITDA of about C$185 million for calendar 2026, reflecting lower volumes and subdued pricing. The company permanently shut down its blast‑furnace operations in January 2026.
Liquidity position
S&P believes Algoma has sufficient liquidity to cover estimated cash‑flow deficits. Liquidity support includes more than C$100 million of working‑capital release in Q1 2026 and an anticipated C$200 million of tax refunds later in 2026. As of 31 March 2026, the firm held C$65 million in cash, had C$195 million available under its $375 million asset‑based lending facility, and C$293 million available under a $500 million government loan facility.
Production transition
Algoma began steelmaking from its first electric arc furnace (EAF) in July 2025 and expects to commission a second EAF in the third quarter of 2026. S&P assumes the company will achieve an annual raw‑steel production capacity of 3.7 million tonnes once the EAF fleet is fully ramped‑up, which should lower fixed costs and reduce capital‑expenditure needs.
Outlook to 2027
The rating agency expects Algoma to transition to positive EBITDA in 2027 as higher volumes and lower unit costs from EAF production materialise. Adjusted debt‑to‑EBITDA is projected to improve to just over 7× by the end of 2027, reflecting the anticipated operational turnaround and improved product‑mix alignment with Canadian market demand.