NEW YORK While
the U.S. steel sheet market has tightened in recent months,
coupled with a number of successful rounds of price increases,
there might only be enough room for another $20 to $30 per ton
in hikes before it hits a potential ceiling, AK Steel
Corp.s top executive said.
"Things are tight ...
and its bolstered pricing. Were quoting $650 (per
ton) and evaluating if another increase is warranted," James L.
Wainscott, chairman, president and chief executive officer of
the company, said during a second-quarter earnings call July 23
as he speculated on the price level at which imports would
likely become attractive enough to U.S. buyers. "Ill
leave that to those who look at the bigger picture, but maybe
another $20 to $30 per ton (higher) if I were to be a
AK Steel, which saw
second-quarter losses widen to $40.4 million (
amm.com, July 23), said that even
though shipments to automakers increased, that boost was offset
by lower carbon steel spot prices.
While Wainscott said
the West Chester, Ohio-based companys earnings for the
three months ended June 30 represented an improvement over the
previous quarter, "forward progress" was halted due to events
outside of its control. This included the unplanned outage at
its Middletown, Ohio, facility, which went offline June 22
following a mechanical failure (
amm.com, June 24).
The company has made
all the necessary repairs and the plant has been in operation
for the past week or 10 days. Full ramp up to production is
more than 90-percent complete, he added.
While the unplanned
outage will likely add some $12 million to $15 million in costs
to the steelmakers financial books later this year, AK
Steel was unsure if the outage would affect third- or
fourth-quarter earnings due to insurance procedures. The outage
took some 25,000 tons offline in the second quarter and an
additional 100,000 to 150,000 tons in the third quarter.
continued to tap into the strength of the automotive sector,
noting that it experienced its best automotive shipping quarter
since the third quarter of 2007. June was the best month for
light vehicle sales in some eight years, it said, citing low
interest rates, credit availability and somewhat better
represented 45 percent of our 2012 revenues, grew to 50 percent
to our first-half 2013 revenue," Wainscott said. "This market
continues to be a source of strength for AK Steel both for our
carbon automotive shipments and our auto chrome shipments as
AK Steel is mindful of
the challenge to lightweight cars, while assessing the market
and doing proper research to get into producing the third
generation of advanced high-strength steels, Wainscott said,
declining to specify if the company would make near-term
investments in this space.
While the contract
side of AKs business moved forward, the carbon spot
market remained lackluster in the quarter, particularly due to
challenging conditions domestically and globally.
were moving away from spot market business in favor of
higher-margin contract business. Our mix of business in 2013 is
70-percent contract, 30-percent spot," according to Wainscott.
"Longer term, our objective is to further increase contract
sales while decreasing our spot market (sales) where typically
the only thing that sets you away from your competition is
In the second quarter,
hot-rolled bands fell to around $560 per ton, which is the
"lowest pricing level" since the fourth quarter of 2010, he
However, due to
several supply-side changes in the market, including the
companys own unplanned outage, AK Steel was able to
announce two of its own carbon spot price hikes that eventually
took hold, leading current quoting activity to some $650 per
ton. Lead times have also extended, with spot market hot-rolled
lead times extending into late August and those for cold-rolled
and coated material into September.