AK Steel Holding Corporation
) declared that it will raise the current spot market base prices
for all carbon flat-rolled steel products by at least $50 per
ton. The price hike is effective immediately with new orders.
Last month, AK Steel released its first-quarter 2013 results. The
Ohio-based company posted a narrower loss in the quarter, aided
by lower raw material costs.
AK Steel posted a net loss of $9.9 million (or 7 cents a share)
in the quarter compared with a loss of $11.8 million (or 11 cents
a share) a year-ago. The loss per share is narrower than the
Zacks Consensus Estimate of a loss of 12 cents.
AK Steel saw a decline in raw material costs, mainly for iron
ore, coal, carbon scrap and coke in the reported quarter. It had
a lower LIFO credit of $6 million in the quarter compared with a
LIFO credit of $12.4 million a year ago.
Revenues fell 9.2% year over year to $1,369.8 million in the
reported quarter due to lower shipments to carbon spot market and
missed the Zacks Consensus Estimate of $1,403 million.
Average selling price dropped 7% year over year to $1,062 per ton
on account of lower spot market prices for carbon steel products,
brought about by a decline in raw material surcharges and lower
selling prices for electrical steel products globally. Shipments
fell 2.7% year over year to 1,289,200 tons due to lower shipments
to the carbon spot market.
AK Steel plans to release a detailed guidance for the second
quarter in Jun 2013. The company has a planned maintenance outage
at the Middletown Works blast furnace in the second quarter.
As a result, AK Steel expects to incur maintenance outage costs
of roughly $21 million in the second quarter compared with $1
million in the first quarter of 2013, reflecting an increase to
its costs. AK Steel anticipates that these enhanced maintenance
costs in the second quarter would be mostly offset as a result of
lower cost in other areas, primarily raw materials.
AK Steel is expected to benefit from the strength in the
automotive market and higher shipment of carbon steel products to
automakers. The company is also investing to internally procure
about half of its iron ore and coal requirements. However, we are
concerned about its high cost structure, the challenging
operating backdrop in overseas markets, softness in the
construction market and the weak steel pricing environment.
AK Steel currently maintains a Zacks Rank #3 (Hold).
Other companies in the steel industry worth considering are
Angang Steel Company Ltd
LB Foster Co
). All of them hold a Zacks Rank #2 (Buy).
AK STEEL HLDG (AKS): Free Stock Analysis
ANGANG STEEL LT (ANGGY): Get Free Report
FOSTER LB CO (FSTR): Free Stock Analysis
USIMINAS SA-ADR (USNZY): Get Free Report
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