Effective immediately, AK Steel Holding Corp. (AKS - Analyst Report) is increasing the market base prices by $50 per ton for hot rolled and cold rolled carbon steel products. It also boosted prices by $60 per ton for coated carbon steel products. The price increase was driven by higher steel-making costs and an increase in orders for carbon steel products.
Last month, AK Steel posted its first-quarter results delivering an EPS of 8 cents compared with 2 cents during the year-ago quarter and striding ahead of the Zacks Consensus Estimate of a loss of a cent.
Net sales as reported by the company were $1,581.1 million on the shipments of 1,423,100 tons versus $ 1,405.7 million and 1,385,800 tons in the prior-year quarter. It however, missed the Zacks Estimate of $1,609 million. The improvement in the shipments was mainly attributable to higher pricing, which increased 9% on a year-over-year basis to $1,109 per ton.
AK Steel is uniquely positioned to focus on products with high margins. Electrical steel continues to be the company’s strongest product line, with demand recovering in the U.S. and abroad, though at a slower rate. AK Steel is operating its plants at above 80% capacity and is well positioned to serve the end markets when the demand rebounds.
However, higher input costs, particularly iron ore, is eroding margins of the company. Iron ore pricing concerns have led to a negative outlook for steel manufacturers. A K Steel currently retains a Zacks #1 Rank (short-term Strong Buy rating).
Ohio-based AK Steel Holding Corporation is a leading producer of flat-rolled carbon, stainless, electrical steel and tubular products. It operates 7 steel-making and finishing plants in Ohio, Pennsylvania, Indiana and Kentucky.
The basic raw materials required for the steel manufacturing are iron ore, coal, coke, chrome, nickel, silicon, manganese, zinc, limestone and carbon and stainless steel scrap. Natural gas, electricity and oxygen are the sources of power for steel manufacturing operations. The company competes with companies like Nucor Corporation (NUE - Analyst Report) and Steel Dynamics Inc. (STLD - Snapshot Report) .
Currently, AK Steel has a short-term (1 to 3 months) Zacks #1 Rank (Strong Buy) and a long-term (6+ months) Neutral recommendation.