NEW YORK AK Steel Corp. expects to post a third-quarter loss due to costs associated with an unplanned blast furnace outage at its Middletown (Ohio) Works coupled with a seasonal reduction in shipments to the automotive industry.
The West Chester, Ohio-based steelmakers third-quarter guidance issued Sept. 19 said it expects to incur a net loss of 22 to 27 cents per diluted share on shipments of 1.24 million to 1.26 million tons, down about 5.3 percent from 1.32 million tons in the second quarter.
"As a result of the outage, the companys melt production during the quarter has been reduced, resulting in a delay of shipments to some carbon spot market customers and an overall reduction in shipments during the quarter," the company said.
The company expects average selling prices to inch up 0.4 percent to about $1,065 per ton in the third quarter from $1,061 in the second quarter due to a more favorable mix of value-added products, although higher prices have been offset by lower raw material surcharge and the effect of delayed shipments to customers.
A mechanical failure earlier this summer forced the steelmaker to idle its Middletown blast furnace (amm.com, June 24). While the furnace came back online in July, market sources said the outage contributed to strength behind a number of sheet increases.
AK said it has continued to honor its commitments to customers for lower-priced orders placed prior to the outage on carbon spot market shipments. As a result, AK has "not been able to realize the full benefit of price increases in the carbon spot market" during the third quarter.
"The company expects to recognize approximately $14 million in insurance recoveries during the third quarter related to the unplanned blast furnace outage. The company anticipates there will be some additional losses incurred and insurance recoveries recorded in the fourth quarter," AK added.
AKs guidance comes after two other major steelmakersCharlotte, N.C.-based Nucor Corp. (amm.com, Sept. 17) and Fort Wayne, Ind.-based Steel Dynamics Inc. (amm.com, Sept. 18)projected stronger financial results due to strength in certain end markets and higher sheet prices.