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AK Steel Hikes Prices of Carbon Flat-Rolled Steel Products

AK Steel Holding Corporation AKS declared that it will raise current spot market base prices for all carbon flat-rolled steel products by at least $30 per ton. The rise in prices will be effective immediately with new orders.

AK Steel is a leading producer of flat-rolled carbon, stainless, electrical steel and tubular products. The company’s adjusted earnings for the fourth quarter of 2015 outstripped the Zacks Consensus Estimate. However, sales fell year over year owing to lower shipments and missed expectations.

Challenging steel market conditions and lower pricing continued to weigh on the company’s results in the fourth quarter. High levels of unfairly-traded imports led to a 6% decline in AK Steel’s average selling price in the quarter.

While AK Steel remains exposed to weak steel market fundamentals, it should benefit from strength in the automotive market and higher shipment of steel products to automakers, supported by increased automotive builds. AK Steel witnessed continued momentum in the automotive market in 2015. Automotive contribution to the company’s revenues was 60% for the year.   

Moreover, the acquisition of the Severstal Dearborn plant has provided AK Steel with access to highly modernized and upgraded steelmaking equipment and facilities. The company should also benefit from its strategic investments to procure about half of its iron ore and coal requirements internally.

AK Steel currently has a Zacks Rank #3 (Hold).

Better-ranked companies in the basic materials sector include Usinas Siderurgicas de Minas Gerais S.A. USNZY, Fortuna Silver Mines Inc. FSM and Harmony Gold Mining Company Limited HMY, all carrying a Zacks Rank #2 (Buy).

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