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AK Steel Ups Stainless Steel Prices

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Just over a month after hiking price of specialty stainless steel products, AK Steel Holding Corp. (AKS - Free Report) has recently announced a price increase on the rest of its stainless steel products, effective with shipments from Jan 1, 2014.

A discount of 2 percentage points for these stainless steel products will aid in the price increase. For all products including automotive exhaust products priced using net prices, the increase will be achieved by adding $0.02 per pound to the existing prices. Surcharges will be applicable on all stainless steel products.

Earlier on Nov 22, AK Steel had hiked 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.

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 increases to consumers. Furthermore, overcapacity, glut in cheaper Chinese steel imports, economic conditions and shifts towards 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. Excluding 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. The company 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, a prominent player in the steel industry along with ArcelorMittal (MT - Free Report) , currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the steel and related industries include Companhia Siderurgica Nacional (SID - Free Report) and United States Steel Corp. (X - Free Report) . While Companhia Siderurgica holds a Zacks Rank #1 (Strong Buy), United States Steel retains a Zacks Rank #2 (Buy).

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