AK Steel (AKS - Free Report) said that it is raising current spot market base prices for all carbon flat-rolled steel products. The company is increasing the prices of these products by a minimum of $30 per ton. The hike is effective immediately with new orders.
AK Steel’s earnings for third-quarter 2016 beat the Zacks Consensus Estimate. Sales fell by double digits year over year, but beat expectations. Shipments for the quarter were down 24% year over year to 1,425,900 tons.
Better product mix, higher average selling price, improved carbon steel market prices, cost reduction measures and lower raw material costs led to a 31% year-over-year increase in adjusted EBITDA in the reported quarter.
The company is laying importance on de-emphasizing commodity products and launching new products, such as its recently announced Nexmet line of next-generation advanced high strength steels.
AK Steel is well placed to gain from strength in the automotive market and higher shipment of steel products to automakers, supported by increased automotive builds. Healthy demand for the company’s carbon and stainless steel products from its automotive customers is expected to continue in the balance of 2016.
AK Steel also remains committed to provide competitive pricing in the current operating environment. Price increases in the spot market for various steel products have been observed of late. The company should also gain from its cost-reduction actions.
However, the steel industry is still not out of the woods. The U.S. steel industry remains under the risk of cheaper imports despite some favorable developments on the import front in the recent past (in the form of imposition of heavy tariffs on imports). The industry also continues to reel under overcapacity. The company is also exposed to a volatile steel pricing environment.
AK Steel has a Zacks Rank #3 (Hold).
Other Stocks to Consider
Better-ranked companies in the basic materials space include Innophos Holdings Inc (IPHS - Free Report) , Koppers Holdings Inc. (KOP - Free Report) and Celanese Corporation (CE - Free Report) .
Innophos sports a Zacks Rank #1 (Strong Buy). The company has an expected earnings growth of 51.4% for the current year.
Koppers has an expected earnings growth of around 63.9% for the current year. The stock carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Celanese carries a Zacks Rank #2 (Buy) and has an expected earnings growth of around 9.4% for the current year.
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