The stock of Canada’s Algoma Steel (ASTL) is up 6% on reports the company has received $500 million in government loan assistance to help it cope with U.S. tariffs.
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According to media reports, Canada’s federal government in Ottawa is giving Algoma Steel $400 million in financial assistance, while the provincial government of Ontario is kicking in $100 million to help the company whose steel products have been impacted by American import duties.
Canada’s federal government launched a $10-billion financing program in March of this year to support domestic companies that are negatively affected by U.S. tariffs. In the case of Algoma, the government said that the impact of the 50% U.S. tariff levied on Canadian steel is “profound.”
Coping with Tariffs
The government loans are meant to help Algoma Steel continue operations, limit disruption to its workforce, and shift to a business model that is less reliant on America. Algoma CEO Michael Garcia has said that U.S. President Donald Trump’s 50% steel tariffs have effectively closed the American market to Canadian steel products.
In addition to the loans, governments in Canada are pushing to include more domestic steel in Canadian infrastructure and defense projects to support the struggling sector. Algoma Steel currently employs about 2,500 full-time workers in Canada and there has been speculation of mass layoffs if the company didn’t get some government support.
Is ASTL Stock a Buy?
The stock of Algoma Steel has a consensus Hold rating among four Wall Street analysts. That rating is based on one Buy and three Hold recommendations issued in the last three months. The average ASTL price target of $6.73 implies 60.81% upside from current levels.
