Stelco Inc.’s court-appointed Monitor has filed its thirty-second Report regarding the company's Court-supervised restructuring. The Report provides updated information regarding the issuance of Stelco's guidance update on June 1, 2005; cash flow results for the entities that filed under CCAA, including variances from the forecast included in the Monitor's 26th Report; and the mediation process.

The Report noted that production of semi-finished steel has decreased during 2005 in response to a softening in steel market demand and operational issues at the Hamilton facility. Total consolidated semi-finished production for the year-to-date ended May 31, 2005 was 2,166,000 net tons, compared to 2,292,000 net tons during the same period in 2004.

The Monitor noted that product shipment volumes have declined during 2005 in response to a softening of steel markets. On a consolidated basis, total shipments for the year-to-date ended May 31, 2005 were 1,967,000 net tons, compared to 2,065,000 net tons during the same period in 2004.

The Monitor also noted Stelco's indication that the softening in steel market demand and pricing has continued through 2005, especially in the construction sector and, to a lesser extent, the automotive sector. The Report noted the volatility of raw material and energy input costs such as scrap, coke, coal, iron ore, electricity and natural gas. The Monitor added that Stelco's future financial results will be highly dependent on the direction of those input costs and the strength of North American steel markets.

The Monitor noted that cash flow forecasts for the applicants that filed under CCAA for the period ended June 11, 2005 through to September 23, 2005 had been included in an Appendix to the Report. The Report noted that Stelco is forecasting that the total facility utilization of the Existing Stelco Financing Agreement will increase by $39.8 million during this period to stand at $113 million as at September 23, 2005. This marks a reversal from previous months, during which the total facility utilization had declined.

This reversal is attributable in large part to a relative reduction in accounts receivable collection caused by forecast lower shipping volumes and reduced spot market selling prices as well as to continued capital expenditure disbursements related to the Phase II upgrade at the Lake Erie hot strip mill and two mini-cogeneration projects at Lake Erie and Hamilton. The Report noted that Stelco will not need to draw upon the DIP Facility during the period in question.

The Report provided an update on various initiatives under the asset sale process. Transactions for the sale of Welland Pipe's U&O mill and for the plate mill assets of Plateco have closed. Stelpipe, Stelco and Romspen are currently negotiating the terms of a definitive agreement concerning the sale of the Stelpipe assets. The Monitor noted that Stelco currently expects to seek Court approval of that transaction in July 2005. The Report added that Stelco is continuing its review of offers it has received for other non-core subsidiaries and is currently pursuing discussions with a number of bidders with respect to their offers. The Monitor noted that proceeds from any sale of the non-core subsidiaries will provide Stelco with additional funds to assist in the recapitalization of the integrated steel business.

The Report further noted that Stelco will seek an extension of the stay period, which expires at midnight on July 8, 2005, to September 23, 2005. The Monitor added that the extension is necessary for Stelco to continue discussions with stakeholders, including through the mediation process, to develop and file a plan of arrangement or compromise, and to complete the claims procedure. The Monitor stated that such an extension is in the interest of all stakeholders and recommended that the request be granted.

Stelco Inc. is a large, diversified steel producer involved in major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses.