Steel maker AK Steel AKS has divulged its plans to temporarily idle the blast furnace and related steelmaking operations at its Ashland, Kentucky Works plant due to challenging market conditions stemming from a deluge of imports of steel products into the U.S. market. The company, however, does not plan to idle the hot-dip galvanizing line at the plant that mainly caters to automotive customers.
AK Steel has notified the hourly and salaried employees at the facility about the work suspension. The notice starts a 60-day period that must be given before idling operations and laying-off workers under the Worker Adjustment and Retraining Notification (WARN) Act. The idling of the affected parts of the plant will start in mid-Dec 2015 and could last more than six months, if the market conditions do not improve.
Ashland Works, which employs roughly 940 people, makes carbon steel slabs, along with hot dip galvanized and galvannealed coated steels.
AK Steel’s shares closed roughly 2% down at $2.86, on Oct 16.
AK Steel and other U.S. steel makers including Nucor NUE, U.S. Steel X and Steel Dynamics STLD remain plagued by an influx of cheaper imports from foreign producers. A recovering economy coupled with a stronger dollar has made the U.S. an attractive market for low-priced steel.
AK Steel and other U.S. companies have filed anti-dumping and countervailing duty petitions with the U.S. International Trade Commission (USITC) with respect to coated, cold-rolled and hot-rolled carbon steel products in an effort to repel the tide of these unfairly-traded imports. AK Steel stated that these imports have materially reduced order intake and production rates, shipment volumes and selling prices.
AK Steel added that it does not see any interruptions in shipments to its customers and has appropriate steelmaking capacity at its other facilities to meet customer needs.
AK Steel, last month, provided its outlook for third-quarter 2015. The company anticipates net loss in the range of 2–7 cents per share for the quarter, representing an improvement from a net loss of 36 cents per share recorded in the second quarter of 2015. This reflects the positive effects of higher shipments, lower raw material costs, improved operating rates and cost-reduction initiatives, which will offset persistent low carbon steel spot market prices.
AK Steel sees shipments of around 1,860,000 tons for the third quarter, up 3% sequentially. The rise in shipments is mainly a result of higher shipments to the automotive market. AK Steel, however, anticipates average selling prices to fall 2% sequentially to around $910 per ton due to lower carbon steel spot market pricing, stemming from high levels of unfairly-traded foreign steel imports.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment