AK Steel (AKS) to Increase Price of Carbon Steel Products
5 January 2018
AK Steel Holding Corporation AKS will raise the current spot market base prices for all carbon flat-rolled steel products by a minimum of $40 per ton in the wake of rising raw material costs. The price hike will be effective immediately.
AK Steel witnessed an improving pricing environment in third-quarter 2017. Its average selling price per ton rose 2% year over year to $1,021 in the quarter primarily due to higher surcharges on specialty steel products as well as increased average selling prices on both spot and contract market sales. The company expects recent price increases to lead to improvement in spot market prices in the near term.
Shares of AK Steel have declined 11.8% in the past three months, underperforming the industry 's 18.7% growth.
AK Steel is anticipated to benefit from strong demand in the automotive market. The company remains focused on expanding core automotive business while laying importance on de-emphasizing commoditized products and launching new value-added products. It is currently developing third-generation, advanced high-strength carbon steels for automotive customers that are considerably stronger than current product offerings.
AK Steel completed the acquisition of Precision Partners Holding Company in August, for $360.9 million in cash. The buyout combines AK Steel's innovation in materials and metals-forming with Precision Partners' tooling and stamping technology, and advanced capabilities. The acquisition is in sync with AK Steel's commitment to broaden portfolio of high-value products and processes, and reinforces collaboration with the company's automotive market customers.
However, AK Steel is exposed to raw material pricing pressure. Electrical steel prices also remain under pressure in overseas markets due to global overcapacity. Moreover, the U.S. market is still seeing high levels of imports of steel products. Some additional headwinds are anticipated in form of spending associated with planned maintenance outages.