Novamerican Steel Inc. announced net income of $20.6 million* on sales of $74.0 million for the second quarter ended May 29, 2004. This was the 26th consecutive profitable quarter for the company.

Second Quarter Results—Net income of $20.6 million ($2.12 per share or $2.07 diluted) represents an $18.7 million increase (1,000.3%) compared to $1.9 million ($0.19 per share) for the same period in 2003. Tons sold and processed increased by 63,034 tons (14.9%) to 485,146 tons from 422,112 in the second quarter of 2003. The gross margin increased to 29.8% from 19.3% in 2003.

Sales, $204.3 million, represent a $74.0 million (56.9%) increase compared to $130.2 million for the same period in 2003.

Six Month Results—Net income, $27.6 million ($2.84 per share or $2.80 diluted), reflects an increase of $24.1 million (689.2%) compared to $3.5 million ($0.36 per share) for the first six months of 2003. Tons sold and processed increased by 89,894 tons (10.8%) to 921,657 tons from 831,763 tons in 2003. The gross margin increased to 28.1% from 19.7% in 2003.

Sales, $351.7 million, represents an increase of $108.7 million (44.7%) compared to $243.0 million in 2003.

Operations—Market conditions were robust during the second quarter as both demand and prices continued to increase and combined to produce record sales and profitability.

Novamerican Steel just announced the installation of its new in-line temper mill and cut-to-length line, which is expected to be completed in the fourth quarter 2004. The new temper mill and rotary shear will improve the surface finish and flatness of cut-to-length sheet and plate and will set a new standard for quality in the Eastern Canadian and New England markets.

Comments—D. Bryan Jones, President and CEO, commented, "As manufacturers continue to invest in laser cutting technology, Novamerican Steel is committed to delivering higher standards of quality in the sheet and plate markets. Our new temper mill will allow us to supply superior quality product which will enhance the productivity of our customers' laser cutting equipment. The temper mill rolling process will improve surface finish, eliminate coil memory (‘springback’) and ensure flatness."

Outlook—Looking forward, Novamerican expects steady demand and firm pricing through the third quarter. While demand is likely to level off due to seasonal shutdowns and vacations, the supply of hot rolled coil should remain tight through August 2004. Management believes that, due to the relatively high price of flat rolled steel, there is still limited steel in the supply chain as service centers and end users remain vigilant with respect to inventory levels.

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

*All amounts are in U.S. dollars.