Novamerican Steel's Outlook

[HenryTo]

From the latest earnings report of Novamerican Steel - just released last night. A combination of oversupply and world economic slowdown?
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OPERATIONS

The second quarter proved to be more difficult than anticipated due to continued downward price pressure which adversely affected margins. Tons sold were down from the same period last year due mostly to the absence of customer hedge buying which characterized the first six months of 2004. Lead times at North American steel mills remained short and many customers reduced inventories to minimum levels in an environment of declining prices.

OUTLOOK

Flat rolled steel prices will likely remain under pressure throughout the summer months due to seasonally weak demand and ongoing reductions in inventories. Management believes the supply/demand balance is approaching equilibrium, which should lead to price stability sometime in August or September. There appears to be a softening in demand which may be explained by steel buyers delaying purchases in anticipation of lower pricing and/or extended summer shutdowns.

COMPANY DESCRIPTION

Novamerican Steel Inc., based in Montreal, Canada with twelve operating locations in Canada and eleven operating locations in the United States, processes and distributes carbon steel, stainless steel and aluminum products, including carbon steel tubing for structural and automotive markets.