NEW YORK AK Steel Corp.
aims to capture more market share in the automotive sector as
the steelmaker continues to shift gears and focus on selling
"The automotive market, which
represents 45 percent of revenue for our full-year 2012,
continues to be a bright spot for our business both in terms of
carbon and specialty steel products," James L. Wainscott,
chairman, president and chief executive of the West
Chester, Ohio-based steelmaker, said during a first-quarter
earnings call April 23. "We anticipate growth in the automotive
sector with higher automotive shipments. Well continue to
move toward richer mixes. We saw that in the first quarter, and
we continue to look for more of that going forward."
AK Steel, which saw its
first-quarter earnings narrow in the first three months ended
March 31 (see related story, left), said that
multiyear highs for housing starts and automotive unit sales
will provide a boost to the steel market.
"In the first quarter of 2013,
AK Steel experienced its highest level of shipments to auto
customers since the first quarter of 2008. Thats
progress," Wainscott said.
The steelmaker saw lower average
selling prices this quarter compared with the same period in
2012, with Wainscott calling the period challenging,
particularly in the spot market.
As for flat-rolled products, the
company said that it did not experience the typical
first-quarter bounce, adding that recent figures from the
Metals Service Center Institute (MSCI) show lower inventories
in March compared to the month prior on short mill lead times
and service centers trying to keep inventory levels lean.
But Wainscott said increased
buying activity would follow once an uptick in demand
"Pricing remains depressed.
(But) I would say that this is the season, traditionally, for a
pickup in pricing because of how the construction season
typically picks up," he said.
A number of steelmakers recently
told customers that they would no longer sell against a
discounted CRU index price (
amm.com, April 18), a move Wainscott supports.
"Weve looked hard at the
CRU index. The index itself, I think, we dont have a
problem with. We certainly have a problem with something
thats CRU-minus," he said. "Arguably, some of us think it
should be CRU-plus given the value we bring to the
He added that CRU-minus deals
"do not accurately reflect market conditions," particularly as
the approach relates to contract business.
Oversupply in the market has
plagued the U.S. steel industry in recent months, Wainscott
said, as AK Steel took some 100,000 tons off the market in the
first quarter due to low prices.
"We make conscious decisions ...
as to how many tons to take to the market based on a variety of
conditions," he said. "We made a decision to take capacity
offline (in the first quarter) because we didnt
particularly care for the pricing."
Sheet prices, particularly
hot-rolled band, have recently faced multiweek slides due to
overcapacity and soft demand. While Wainscott said the company
hasnt been "shy" about price increases this year,
previous hikes helped establish a floor. He did not, however,
say if AK Steel would follow them.
In addition to selling finished
goods, the company is trying to control input costs,
particularly as it prepares to ramp up its AK Coal Resources
Inc. division, which is expected to provide the steelmaker up
to 50 percent of its annual coal requirements, as well as its
Magnetation LLC joint venture. Wainscott added that the
Magnetation project, which is a year ahead of schedule,
recently received the air permit from Indiana to operate its
plant, and construction should begin very soon.
"These are important strategic
steps that will provide (us) substantial cost savings,"