In just three weeks time,
AK Steel Holding Corporation
) has decided to hike carbon steel products prices yet again. The
company will raise carbon flat-rolled steel products' current
spot market base prices by at least $40 per ton. The price
revision is effective immediately with new orders.
The Ohio-based company, on May 23, 2013, announced a price
increase for the same by a minimum $50 per ton.
From the steel industry perspective, steel prices are generally
volatile owing to the highly cyclical nature of the global steel
While rising raw material prices would trigger a hike in steel
prices, it is often challenging to pass on the hike to consumers.
Further, overcapacity, excess of cheaper Chinese steel imports,
economic conditions and shift toward other substitutes
significantly impact steel prices.
AK Steel's average selling price dropped 7% year over year to
$1,062 per ton in the first quarter of 2013 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.
However, average selling price increased 5% sequentially due to a
higher value-added product mix and higher carbon spot market
prices, partially offset by lower selling prices for electrical
steel products globally. Shipments fell 2.7% year over year to
1,289,200 tons in the quarter due to lower shipments to the
carbon spot market.
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 will release its second-quarter 2013 results before
trading begins on Jul 23.
AK Steel currently holds a Zacks Rank #3 (Hold).
Other companies in the steel industry with favorable Zacks
Kobe Steel Ltd.
Shiloh Industries Inc.
Angang Steel Company Limited
). While both Kobe Steel and Shiloh Industries hold a Zacks Rank
#1 (Strong Buy), Angang Steel retains a Zacks Rank #2 (Buy).
AK STEEL HLDG (AKS): Free Stock Analysis
ANGANG STEEL LT (ANGGY): Get Free Report
KOBE STEEL-ADR (KBSTY): Get Free Report
SHILOH INDS INC (SHLO): Get Free Report
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