AK Steel Holding Corporation
) will hike its stainless steel product prices, with effect from
Jul 6. The company will increase the price for automotive grades by
$40 per ton, and for non-automotive grades by $200 to $300 per ton,
depending on the product. Surcharges will be applicable to its wide
range of stainless steel products.
Prior to this, on Apr 15, AK Steel increased the 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 raised 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 was
effective with shipments from May 4, 2014.
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.
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 Korea.
Recently, AK Steel announced its outlook for the second quarter
of 2014. The company expects to posts a net loss in the range of 19
to 23 cents for the quarter, which is a considerable improvement
from the loss of 63 cents per share reported in the first quarter
AK Steel expects adjusted loss to be in the range of 2 to 6 cents
per share. This excludes a loss of 17 cents per share that reflects
mark-to-market losses on derivatives, which are expected to be
about $23 million for the quarter.
AK Steel currently has a Zacks Rank #3 (Hold).
Some other stocks worth considering in the steel space include
Universal Stainless & Alloy Products Inc.
Grupo Simec S.A.B. de C.V.
). While Universal Stainless has a Zacks Rank #1 (Strong Buy),
Grupo Simec and ThyssenKrupp hold a Zacks Rank #2 (Buy).
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