AK Steel Holding Corporation
) will hike prices of commodity sheet and strip, pipe and tube
sheet and strip as well as specialty sheet and strip through a
discount reduction of 2 percentage points. The company will raise
prices of all other stainless steel products, including
automotive exhaust sheet and strip by $40 per ton.
The price hike for all stainless steel products will be
effective with shipments from May 4, 2014. Surcharges will remain
applicable on all stainless steel products of AK Steel.
Prior to this, on Mar 14, AK Steel had raised prices for all of
its stainless steel products, effective with shipments from Apr
1, 2014. Price increases for stainless steel products were
achieved through a discount reduction of 2 percentage points and
all products using net prices including automotive exhaust
products, by adding 2 cents per pound on the existing prices.
From the steel industry's perspective, steel prices are
generally volatile owing to the highly-cyclical nature of the
global steel industry. Rising raw material prices have a direct
impact on steel prices. Furthermore, overcapacity, a glut in
cheaper Chinese steel imports, economic conditions and shifts
toward other substitutes significantly impact steel prices.
This was what affected steel prices in 2013. The oversupply of
steel due to imports from China in the market outstripped demand.
The situation in Europe and tempering growth in Asia added to
this and kept prices in check. The lower steel prices affected
margins of major steelmakers including
United States Steel Corp.
) for the major part of the year.
A sustained decline in steel prices will materially affect
margins of steel companies. However, the recovery in pricing is
expected to be driven by a reviving economy, stabilization in the
Euro-zone and a rebound in construction activity in the
developing countries, particularly in China, India and South
According to the first-quarter 2014 outlook provided by AK
Steel, it expects its average selling price to rise roughly 6% to
about $1,095 from $1,031 per ton in the fourth quarter of 2013
due to a richer shipment mix of value-added products.
Also, the company expects to incur loss in the range of 44
cents to 49 cents per share in the first quarter mainly due to
higher energy costs and an unplanned outage at its Ashland Works
blast furnace. Due to the outage, AK Steel expects its steel
shipments to decline 10-12% sequentially to about 1,250,000 to
1,275,000 tons in the first quarter of 2014.
AK Steel is slated to release its first-quarter 2014 results
on the Apr 22 before the market opens. The Zacks Consensus
Estimate for the quarter is currently pegged at a loss of 43
AK Steel currently holds a Zacks Rank #3 (Hold).
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