Stelco is warning that it won't meet its targets for production, revenues or earnings because the steel market has weakened considerably in the past few months.
"As the third quarter was ending, we realized the market was softening much more than expected," Stelco CEO Rodney Mott said during a conference call with analysts Friday.
The Stelco steel plant in Hamilton was shut down last week for the first time in 16 years.
(J.P. Moczulski/Canadian Press)
Mott said demand for its products was down more than expected as the Big Three automakers announced big production cuts. Inventories of steel are also high.
Stelco said, like most other steelmakers, it is already reducing its production levels to match the lower demand. It will also extend previously planned outages at its Hamilton blast furnace and Lake Erie hot strip mill.
Stelco shut down production in Hamilton last week — the first such shutdown in 16 years.
"It is expected that the reduced demand will continue through the fourth quarter and into the first quarter of 2007," a company statement said.
After the market closed Thursday, Stelco reported a third-quarter loss of $25 million. Revenues in the quarter were $660 million — down 5.4 per cent from the previous quarter — because of a similar drop in shipments.
The warning of a soft steel market for at least the next couple of quarters sent Stelco shares down almost seven per cent. The stock was trading at $19.25 in afternoon trading on the TSX, down $1.35.
Stelco emerged from more than two years of creditor protection last March.
With files from the Canadian PressRelated
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