AK Steel Bumps Up Hot Roll Carbon Steel Price

Steelmaker AK Steel (AKS) said that it is raising the current spot market base price for its hot roll carbon steel to at least $700 per ton. The price hike is effective immediately with new orders. The company, last month, raised the price for the product to $660 per ton.

AK Steel should gain from strength in the automotive market and higher shipment of steel products to automakers. The company is expected to continue to gain automotive market share, driven by continued healthy demand for its carbon and specialty steel products. The company expects higher shipment of carbon and stainless steel products to the automotive market in 2014.

AK Steel is also investing to procure about half of its iron ore and coal requirements internally. It is making good progress with its first coal mine at AK Coal and 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.

However, AK Steel expects to post a loss in the first quarter of 2014 as higher energy costs and an unplanned outage at its Ashland Works blast furnace are expected to drag down its bottom line. The cost of natural gas and electricity is expected to increase due to cold weather.

Nevertheless, AK Steel should benefit from the favorable pricing trend for key steelmaking raw materials such as iron ore, coke and coal this year. Declining prices for these inputs should acts in its favor.

AK Steel expects to gain from lower input costs, mainly for coal and coke, starting the second quarter. It sees a year over year decline of around $70 million in coke and coal costs in 2014.

AK Steel is a Zacks Rank #3 (Hold) stock.

Other companies in the steel and related industries with favorable Zacks Rank are NN Inc. (NNBR), Century Aluminum Co. (CENX) and Norsk Hydro ASA (NHYDY), with all retaining a Zacks Rank #2 (Buy).