AK Steel Holding Corporation (AKS - Free Report) declared that it will raise the current spot market base prices for all carbon flat-rolled steel products by at least $50 per ton. The price hike is effective immediately with new orders.
Last month, AK Steel released its fourth-quarter 2012 results. The company slipped to a wider loss in the fourth quarter, hit by hefty pension, tax charges and weak pricing.
AK Steel posted a net loss of $230.4 million (or $1.89 a share) in the quarter compared with a loss of $193.9 million (or $1.76 a share) a year ago. The company recorded a pension charge of $157.3 million and a non-cash income tax charge of $96.4 million in the reported quarter. Excluding these items, the company’s loss was 30 cents a share in the fourth quarter, which beat the Zacks Consensus Estimate of a loss of 35 cents.
Revenues fell 6% year over year to $1,423.1 million in the reported quarter on lower pricing, but beat the Zacks Consensus Estimate of $1,416 million.
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.
AK Steel is making good progress with its coal mine plan and expects to begin mining activities in the first half of 2013. It is also making significant progress with its iron ore pellet project at Magnetation. Both these strategic investments are expected to improve the company’s cost structure and strengthen its position in the years ahead.
Moreover, AK Steel is also expected to benefit from the favorable pricing trend for key raw materials such as iron ore, coke and coal. Declining prices for these inputs should act in its favor.
However, the company is exposed to a challenging operating backdrop in overseas markets stemming from the recessionary conditions in Europe and sluggish growth in Asia, softness in the construction market and the weak steel pricing environment.
AK Steel currently maintains a Zacks Rank #3 (Hold).
Other companies in the steel industry space worth considering are Companhia Siderurgica Nacional (SID - Free Report) , Commercial Metals Company (CMC - Free Report) and Gibraltar Industries Inc. (ROCK - Free Report) . All of them hold a Zacks Rank #2 (Buy).