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AK’s 1st-quarter loss narrows as pricing outlook improves

Keywords: Tags  AK Steel, electrical steel, James Wainscott, raw materials, flat products, Catherine Nga

NEW YORK — AK Steel Corp. posted its seventh consecutive quarterly loss in the first three months of this year, but the steelmaker expects an improvement in spot market pricing to play out later this year.

The West Chester, Ohio-based steelmaker’s first-quarter net loss totaled $9.9 million, a far cry from a $230.4-million loss in the fourth quarter of 2012 and a 16.1-percent improvement from an $11.8-million loss a year earlier.

First-quarter sales of $1.37 billion were down 9.2 percent from $1.51 billion in the same period last year on shipments that fell 3 percent to 1.29 million tons from 1.33 million tons in the same comparison.

The company had previously warned that it expected to record a loss—albeit a smaller one—as a traditional first-quarter uptick had yet to materialize (, March 22).

A number of factors contributed to the weakness, AK Steel said, although lower shipments in the carbon spot market were partially offset by increased shipments to the automotive market.

"While the automotive market was a bright spot for our business, markets remained challenging for some products, particularly those in the spot market," chairman, president and chief executive officer James L. Wainscott said in a statement. "Simply put, global steelmaking capacity continues to exceed demand. Additionally, the cyclical improvement in spot market pricing we normally see during the first quarter did not materialize and is expected to occur later this year."

The steelmaker said its sales prices averaged $1,602 per ton in the first quarter, up 5 percent from the fourth quarter—thanks to a higher value-added product mix and higher carbon spot market prices, partially offset by lower selling prices for electrical steel products globally—but down 7 percent from a year earlier due to reduced raw material surcharges, lower selling prices for electrical steel and lower spot market prices for carbon steel products.

Looking forward, AK Steel said that lower raw material costs expected in the second quarter should offset maintenance costs related to a planned seven-day blast furnace outage at its Middletown, Ohio, facility.

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