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AK Steel Raises Stainless Steel Prices

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AK Steel Holding Corporation (AKS - Free Report) will hike the base prices for all martensitic products, precipitation hardening (PH) products, tensile rolled products, duplex products, bright annealed products and custom melt products or grades that are specific to the company.

The price hike of these specialty stainless steel products will be effective with shipments from Jan 1, 2014. A reduction in the discount of 2 percentage points for these specialty stainless steel products will allow the price increase. Surcharges will be applicable on all stainless steel products.

Prior to this, AK Steel had raised its base prices for all 200, 300 and 400 series flat rolled stainless steel products on Jul 30, 2013, which was effective with shipments till Aug 1, 2013. AK Steel also hiked the price depending on a reduction in the functional discount of 2 percentage points for cold rolled and hot rolled non-automotive exhaust products.

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 as higher raw material prices induce a corresponding increase in steel prices.

However, in the wake of lower demand, it becomes increasingly challenging to pass on raw material price hikes to consumers. Furthermore, overcapacity, glut in cheaper Chinese steel imports, economic conditions and shifts toward other substitutes significantly impact steel prices.

AK Steel posted a net loss of $31.7 million or 23 cents a share in third-quarter 2013, roughly 48% narrower than a loss of $60.9 million or 55 cents a share a year-ago. Barring one-time items (tax charges related to a valuation allowance for deferred tax assets), AK Steel’s loss for the quarter was 12 cents per share.

Revenues fell 9% year over year to $1,331.3 million in the reported quarter due to lower shipments.

AK Steel expects results to improve sequentially in the fourth quarter. AK Steel should 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, concern remains about the soft construction market and the weak steel pricing environment.

AK Steel currently retains a Zacks Rank #3 (Hold).

Other companies in the steel and related industries with favorable Zacks Rank are Companhia Siderurgica Nacional (SID - Free Report) , United States Steel Corp. (X - Free Report) and Mueller Water Products, Inc. (MWA - Free Report) . While Companhia Siderurgica holds a Zacks Rank #1 (Strong Buy), both United States Steel and Mueller Water retain a Zacks Rank #2 (Buy).

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