Algoma Steel Group: Long-Term Upside from EAF Transition Tempered by Section 232 Tariff Overhang, Supporting Hold Rating

Algoma Steel Group (ASTL) has received a new Hold rating, initiated by Jefferies analyst, Chris LaFemina.

Chris LaFemina has given his Hold rating due to a combination of factors tied to Algoma Steel Group’s ongoing transition and the external trade environment. He recognizes that the company’s shift from blast furnace/basic oxygen furnace operations to electric arc furnace production should, over time, lift margins, boost output of higher-value steel products, and reduce capital intensity, setting the foundation for substantially stronger earnings and cash flow once market conditions normalize. However, he also notes that Algoma’s heavy historical reliance on U.S. exports leaves it acutely exposed to the current 50% Section 232 tariffs on Canadian steel, which have driven a sharp divergence between Canadian and U.S. steel prices and rendered Canadian supply unattractive to U.S. buyers at present levels.

At the same time, LaFemina highlights that the company’s share price has already fallen significantly in 2025, even as U.S. steel peers have rallied, and that recent steps to shore up liquidity should help limit further downside while the EAF transition progresses. This creates what he views as a longer-term value opportunity contingent on improvement in the trade backdrop, including the possibility of a renegotiated North American steel agreement that could reduce or remove tariff headwinds. Nonetheless, given the magnitude and uncertainty of the tariff overhang and the near-term market disruptions it has caused in Canada, he concludes that the balance of risks and opportunities currently supports a neutral stance rather than a more aggressive rating. His C$6.00 per share risk-adjusted target price reflects this mix of structural upside from the transformation and the significant policy-related risks that still need to be resolved.

In another report released on December 20, TipRanks – OpenAI also reiterated a Hold rating on the stock with a C$6.00 price target.