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AK Steel hikes flat-roll tags; buyers skeptical

Keywords: Tags  AK Steel, price hike, flat-rolled, steel prices, steel buyer, service center


NEW YORK — AK Steel Corp. has announced plans to raise base prices for all carbon flat-rolled steel products by $40 per ton ($2 per hundredweight), the first domestic steelmaker to hike published prices in the new year but leaving some buyers skeptical as to whether the attempted increase would hold.

The West Chester, Ohio-based steelmaker’s increase, announced Jan. 21 and effective immediately (amm.com, Jan. 22), followed weeks of speculation that a sheet increase was in the works.

AK Steel did not give a reason for the move in announcing the hike, but market participants speculated that it was looking to stymie a recent softening in domestic sheet prices amid sluggish demand from many end-use sectors (amm.com, Jan. 16).

"I think the mills will all follow suit. At the levels before, the mills were selling at cost or at least really close to it," one mill source said. "I think with everything going on around the world—iron ore up, scrap up, etc.—it seems to me that now is the time for the U.S. to move prices up."

Buyers last week reported average hot-rolled coil purchases at $620 per ton ($31 per cwt) f.o.b. Midwest mill, with some citing discounts for larger volumes, down from early January prices of around $630 per ton ($31.50 per cwt).

"I don’t think it’s a bad time to put a price increase out there because it’s a signal of how mills aren’t making any money," the mill source said. "Everyone is just waking up now."

While AMM was not aware of other pricing announcements as of late afternoon Jan. 22, market participants agreed that other mills would need to jump on board for the increase to take hold.

"In theory, the mills have the same desire to get their prices up. I would hope that most people want to see the price go up," a buyer said.

But while market players said the move made sense as mills try to boost their margins, some players are doubtful the increase will stick, given lackluster demand and short lead times.

"The price hike is wishful thinking. Maybe it’s their indication that they don’t want to go lower than what they have. All the mills right now are looking for orders, so we’re on a slippery slope," a second buyer said. "Things are so volatile right now. It’s the wild, wild West out there."

The first buyer agreed. "At the end of the day, if lead times don’t push up and order books don’t get filled, it will be impossible to implement the increase. It’s a little lackluster out there and the mills have a lot of challenges. We’ll see how this thing shakes out."

On the import side, traders said the price hike would probably do little to encourage activity.

"There’s not much available offshore right now. Prices from Europe have been going up a bit. And comparing domestic prices, there’s not enough price differential to demand and justify imports right now," one trader said. ‘I don’t think it’ll do very much for us, but it’s good for the market overall."


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