AK Steel Holding Corporation (AKS) said that it will raise the current spot market base prices for all carbon flat-rolled steel products by $40 per ton. The move is effective immediately with new orders.
AK Steel, like other steel makers including Nucor Corporation (NUE), U.S. Steel Corp. X) and Steel Dynamics Inc. (STLD), is contending with weak steel demand, oversupply in the industry and pricing pressure. Lower steel pricing hurt the company's bottom line in the third quarter of 2012.
AK Steel is also hamstrung by weak construction and housing sectors. Moreover, it is exposed to macroeconomic uncertainties, stemming from the recessionary conditions in Europe and sluggish growth in Asia.
AK Steel, in November 2012, said that it sees wider loss in fourth-quarter 2012 as a hefty non-cash tax expense coupled with lower steel pricing is expected to dent its bottom line in the quarter. Moreover, the company expects its average per-ton selling price to slip roughly 5% sequentially in the fourth quarter, partly triggered by lower spot market prices for carbon steel products as a result of weaker global economic conditions and lower raw material surcharges.
AK Steel also noted that lower raw material costs will not fully offset the decline in prices. Nevertheless, the company expects shipments to increase sequentially in the fourth quarter.
AK Steel is expected to benefit from the strength in the automotive market and higher shipment of steel products to automakers. The company envisions shipments of carbon steel products to automakers to surge 20% to 25% year over year in 2012. The company will release its fourth quarter results on January 29.
AK Steel currently holds a short-term (1 to 3 months) Zacks Rank #4 (Sell).