Article content

Zekelman and others say such prices will finally allow domestic mills to operate profitably so they can reinvest in their assets and that if the federal government adopts a firm policy restricting steel imports, it will eventually solve product shortages, primarily by giving domestic producers’ confidence to invest in expansions into products not currently produced here.

Article content

“It’s very hard to perfectly balance the scales of trade at every moment,” he said. “The goal here is to stop the wild swings.”

Article content

There are, however, other factors affecting steel prices.

Article content

Steel production significantly dropped in recent months at Sault Ste. Marie, Ont.-based Algoma Steel Inc., the only non-foreign-controlled steel mill, as it transitioned away from a gas-powered blast furnace to an electric arc furnace that is expected to lower its carbon emissions by 70 per cent.

Article content

Algoma idled its plant this summer because of an unplanned outage at its electricity generation facility. Earlier this month, it said its third-quarter steel sales likely dropped to 145,000 tonnes, down 68.8 per cent from the previous three-year average of 464,527 tonnes.

Article content

Article content

Algoma did not respond to requests for comment.

Article content

Another factor has been Cleveland Cliffs shipping steel slabs to the U.S. earlier this year, which some steel plant execs said exacerbated shortages of hot-rolled steel in Canada. The company last week confirmed to the Globe and Mail that it had been shipping 60,000 tons per month to its plants in the U.S.

Article content

Cleveland Cliffs declined further comment, but it previously said it is shutting down its cold-rolled steel operations in Canada because of a lack of demand.

Article content

Goncalves said on an earnings call in July that unfairly priced imports were destroying the market for cold-rolled steel and he reiterated on Oct. 19 his call for more protection, calling that market segment “oversupplied.”

Article content

But Ron Wells, president of United Steelworkers local 1005, which represents Stelco’s laid-off workers in Hamilton, said the company’s Canadian operations have been profitable this year.

Article content

“We have a profit-sharing component in our basic agreement,” he said. “If we get to a certain threshold, it pays. The last three quarters, we’ve got small profit-sharing cheques.”

Article content

Article content

Wells said shutting the cold-rolled operations down is a “manufactured crisis” because the layoffs give Cleveland Cliffs leverage as the union is set to bargain a new agreement next July.

Article content

Demand for cold-rolled orders from the plant is still high, said Brendan Sweeney, a spokesman for the Pacific Manufacturing Association of Canada, a trade group representing Honda Motor Co. and Toyota Motor Co.

Article content

“We’ve heard that it’s about lower demand,” he said. “That’s not us. Our demand is still high. We’re still producing.”

Article content

One Stelco worker said one of the last production runs was for Honda.

Article content

Automakers may be able to find alternative steel sources, but smaller companies may not have the resources to do so.

Article content

Armando Infusino, materials manager of Aurora, Ont.-based Claymore Metals Inc., which produces steel studs for the construction industry, said prices for cold-rolled steel have been rising for months, rose again on Monday, but it’s still difficult to procure as much steel as needed.

Article content

“The mills are not allocating what you need,” he said. “If you used to buy 1,000 tonnes, they’re giving you a fraction of what you need.”