Canadian Steel Producers That Could Benefit From The New $100 Million Freight Rebate

The Canadian government’s new $100m freight rebate program is shaking up the steel sector, as domestic producers see half their shipping costs covered for a limited time. That creates a window in which some stocks could gain fresh attention, while others risk being left on the sidelines. This article walks through 3 Canadian steel producers exposed to this policy shift and what this might mean for your watchlist.

The 3 stocks covered below are just a starting sample. The full screen surfaced 12 more Canadian steel producers with equally compelling stories that are not covered here. To go deeper on the sector right now, head straight to the Canadian Steel Producers screener to identify and analyze the highest conviction ideas.

ADF Group (TSX:DRX)

Overview: ADF Group (TSX:DRX) designs, fabricates and installs complex steel structures and heavy steel components for non residential projects such as office towers, transport infrastructure, industrial complexes and energy facilities across Canada and the United States. The company also provides machining, welding, industrial mechanics and customized overhead crane solutions to general contractors, project owners and other steel fabricators.

Operations: ADF Group generates about CA$302 million in revenue from non residential construction projects, with roughly CA$238 million from the United States and CA$64 million from Canada.

Market Cap: CA$431 million

ADF Group sits at an interesting crossroad for investors who care about both growth and real economy exposure. The company focuses on non residential steel projects, carries analyst forecasts of strong double digit earnings and revenue growth, and recently reported quarterly sales of CA$99.26 million and net income of CA$12.04 million. A large order backlog of about CA$646 million, plus more than CA$280 million in additional contracts since year start, gives some visibility on future work, while the new Canadian freight rebate program could support demand for domestically fabricated steel. At the same time, margin pressure, heavier reliance on borrowing and large capital projects funded by government linked loans mean investors need to weigh balance sheet risk and execution quality carefully.

ADF Group’s order book and non residential focus suggest a story that could be more significant than the headline numbers indicate. Use the 2 key rewards and 1 important warning sign to explore what might be masking the full picture.

Build your own non residential steel shortlist

ADF Group and the two other stocks in this list all surfaced from a single Simply Wall St screen, but the real value comes from setting filters that match your own approach. Use our flexible Screener to mix valuation, growth, balance sheet and risk metrics, or tap into our curated Investing Ideas for ready made starting points.

Labrador Iron Ore Royalty (TSX:LIF)

Overview: Labrador Iron Ore Royalty (TSX:LIF) gives you exposure to Canadian iron ore production through its 15.10% equity stake in Iron Ore Company of Canada, which operates an iron mine, concentrator and pellet plant in Labrador City and sells pellets and concentrates used in steelmaking. The company primarily earns income from this interest and related royalties on iron ore products shipped to steel producers.

Operations: Labrador Iron Ore Royalty generates about CA$153 million in revenue from iron and steel related activities in Canada.

Market Cap: CA$1.73 billion

The new CA$100 million freight rebate program is especially interesting for Labrador Iron Ore Royalty because it sits at the very start of the Canadian steel supply chain. Some analysts forecast earnings growth of about 29.13% a year and anticipate high future returns on equity. The stock is reported to be trading below one discounted cash flow (DCF) estimate of fair value and offers a 5.73% dividend yield. However, earnings, revenue and margins have all softened over the past year, and that dividend is not well covered by profit or free cash flow. For investors who can handle commodity and payout risk, the combination of policy support for domestic steel, the nature of its earnings and its income potential may warrant a closer look.

Labrador Iron Ore Royalty sits at the crossroads of income appeal and freight backed steel demand, yet many investors focus only on the dividend headline. Start with the 2 key rewards and 1 important major warning sign and see what might be quietly driving the real story.

Major Drilling Group International (TSX:MDI)

Overview: Major Drilling Group International (TSX:MDI) provides contract drilling services to mining and mineral exploration companies worldwide, handling everything from early exploration holes to complex production work. The company offers a wide range of drilling types, including core, reverse circulation, directional, sonic, geotechnical, environmental and drill and blast services across multiple continents.

Operations: Major Drilling Group International generates about CA$889 million in revenue from drilling services, with roughly CA$163 million from Canada, CA$173 million from the United States, CA$176 million from Australasia and Africa, and CA$376 million from South and Central America.

Market Cap: CA$1.27 billion

Major Drilling Group International operates at the intersection of rising metals exploration budgets, policy support for Canadian steel related activity and a full order book of drilling contracts. Revenue reached CA$889.08 million in the year to April 2026 and analysts expect earnings growth that runs well ahead of the broader Canadian market, yet net margins are thin at 2.4% and the P/E multiple is high, which puts pressure on execution. The company’s focus on specialized drilling, exposure to gold and copper, and contracts in regions such as Brazil provide exposure to a multi commodity story. However, reliance on volatile exploration spending and heavier use of external borrowing introduce additional risk. The freight rebate program is another factor that could be relevant for Major Drilling Group over the next year.

Major Drilling Group International sits at the crossroads of thin margins and a high P/E multiple, which hints at something investors may be missing. Use the 3 key rewards and 1 important warning sign and see what could suddenly shift this story

Seeking Fresh Alternatives Beyond Steel?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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