Algoma Steel Rally Tests Bears Ahead of Earnings

ASTL heads into its October 29 earnings report on a 16% surge over the past month, with options traders shifting decisively to the bullish side even as short sellers quietly add to their positions.

The options signal is the most striking feature of the current setup. Call demand has overwhelmed puts: the put/call ratio has dropped to 0.78, more than two standard deviations below its 20-day average of 0.95. That is the most bullish options tilt of the past year for this stock, a clear departure from the cautiously hedged stance that prevailed through most of September and early October. The stock itself has responded: up 10% on the week to $4.94, after a 3% gain on Wednesday alone. The borrow market tells a calmer story. Availability remains ample at 419%, meaning roughly four shares are available to borrow for every one already lent out, well above the 52-week tightest reading of 183%. Cost to borrow has eased back to 1.47% after a mid-month spike toward 2.7%. Short interest has risen 27% over the past month to 5% of the free float, but lending conditions are too loose to put meaningful squeeze pressure on those positions.

The core disagreement among investors is about the pace and credibility of the company's transformation. Bulls point to the electric-arc-furnace transition as the defining catalyst: management is targeting a "scrap plus $200" input cost structure, higher volumes and a richer product mix that could push EBITDA toward $335 million in 2027 if steel prices recover as tariff discounts unwind. Q1 was expected to be the trough, and the bull case holds that earnings power improves steadily from here. Bears counter that 90% of revenue is tied to steel products deeply exposed to tariff pressure, Canadian sheet oversupply, and U.S. demand softness. The EAF ramp introduces its own execution risk, through start-up delays, power infrastructure and higher interim costs, and at 74% industry utilisation, Algoma's single-asset scale leaves it more exposed than its larger US peers. The most recent analyst consensus, which dates from April 2026, stands at hold, with the available price targets well above current levels, though the data is too dated to treat as a reliable directional signal. The earnings yield factor score ranks in the 2nd percentile, a reflection of the losses the business is currently running.

One ownership detail sharpens the picture. Maple Rock Capital Partners, the largest holder with roughly 16% of shares, filed a Schedule 13D/A in May 2026, a designation ORTEX flags as activist, and has been building its stake from 13.3% to 15.1% through five separate filings since May 2025. That level of concentrated, active ownership amplifies the scrutiny on this print. (Stakes are as-last-disclosed around the 5% threshold; holders dropping below 5% may exit without a further filing.)

The past two earnings releases each produced a sharp negative reaction: the stock fell around 9% in a single session after the July 2026 print and 9% again in August. The October 29 report will test whether the rally of the past month has priced in a credible improvement in EBITDA trajectory, or whether the gap between the bullish options positioning and the bears' short build reflects a genuine disagreement about execution that only the numbers can resolve.