Canadian Steel: Q2 preview

研报英文原文证据摘录

Canadian Steel: Q2 preview

RBC Dominion Securities Inc.

James McGarragle, CFA, CPA

(Analyst)

(416) 842-7862,

james.mcgarragle@rbccm.com

June 30, 2026

Canadian Steel: Q2 previewRESEARCH Our view: In this report, we update our estimates for our improved steel price outlook as well as

reflecting improving demand fundamentals that we expect to benefit results at Russel. For Algoma, we

increase our Q2 EBITDA estimate to -$67MM (from -$87MM), roughly in line with consensus -$64MM,

and revise our full-year 2026 EBITDA to -$158MM (from -$198MM), in line with consensus -$160MM,

resulting from higher steel prices. We expect Algoma to achieve break-even EBITDA by year-end as

utilization improves and under absorption costs diminish, however see the longer term capacity ramp

as less certain given current supply-demand dynamics in Canada. For Russel, our Q2 EPS estimate is

unchanged at $1.07, in line with consensus $1.07. That said our EPS estimate reflects a meaningfulEQUITY expected headwind on MTM on SBC of $0.19/share given the strong share price performance in the

quarter, which we do not believe is factored into consensus numbers; and we therefore view our

estimate as representing significant upside versus what is being built into street estimates. We also flag

Russel's valuation discount versus Reliance has contracted meaningfully in recent quarters; and we see

further room for this to improve if the company continues to execute operationally.

• Algoma and Russel shares diverged QTD. Algoma's shares were roughly flat in Q2, up +1%, trailing

the steel producer group average of +19%, in our view reflecting continued uncertainty related to

steel tariffs (see Exhibit 1). Russel shares traded up +24% in Q2, outperforming US distributor peers