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Banner year ahead: auto industry doldrums and a less-than-favorable exchange rate can't curb overall optimism for Canadian steel in 2006.

Article Excerpt
THOUGH CONCERNS ARE PLENTIFUL and levels of optimism vary widely, Canadian steel watchers are generally bullish about prospects for 2006.

Some, such as Denis Turcotte, president of Algoma Steel Inc. in Sault Ste. Marie, Ontario, see a robust market for steel in the year ahead and beyond. Others, like admitted pessimist Bud Siegel, president of Russel Metals Inc. in Mississauga, Ontario, would be delighted for steel to simply hold steady for another year.

"We haven't had any movement the last four years, excluding tons we've acquired through acquisitions," says Siegel.

Metals Service Center Institute data indicate that steel shipments in Canada declined 4.1 percent through October, compared with the same 10-month period last year. September and October shipments showed gains of 6.9 and 11.3 percent, respectively, however, suggesting a modest turnaround late in the year.

"At one point it was down roughly 6 percent on shipments overall. It's improved to where it's coming back almost to flat again," says Siegel, who doubts the recent uptick is a long-term trend.

Given the strengthening of the Canadian currency, which puts Canadian exporters at a disadvantage, flat steel consumption in Canada could be viewed as a positive, he adds. "The Canadian dollar has appreciated against the U.S. dollar by about 25 percent over that period of time (the previous four years). The fact is that a good percentage of the steel consumed is eventually shipped to the U.S. in...

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