AK Steel Holding Corporation (NYSE:AKS) plans to increase spot market base prices for carbon flat-rolled steel items by a minimum of $30 a ton. The new prices are effective immediately. It should be noted that the company is a major producer of flat-rolled carbon, electrical steel and stainless products, and stainless tubular and carbon products, mainly for automotive, manufacturing and infrastructure, power generation and distribution sectors.
Headquartered in West Chester, the firm employs almost 8,500 women and men at 8 steel plants, 2 coke plants and 2 tube manufacturing plants spread across 6 states, Indiana, Michigan, Kentucky, Pennsylvania, West Virginia and Ohio and 1 tube plant in Mexico.
The buzz
Steelmakers are in focus as China reportedly contemplates on cutting production to combat smog, and Nucor Corporation (NYSE:NUE) stock is enjoying the added benefit of getting an upgrade to ‘Overweight’ from ‘Equal Weight’ with a price target at $78 as projected by Morgan Stanley.
Evan Kurtz, the analyst with Stanley, finds a couple of trade case-linked catalysts with the Trump administration anticipated to apply tariffs on increased categories of Chinese steel, and projects the construction market, which makes for over 50% of NUE’s shipments, advancing 4% this year.
Kurtz stated that that while Nucor would gain from a favorable verdict on planned plate and rebar trade cases, he is bothered that AK Steel’s heavy auto steel as well as electrical steel exposure may become headwinds in this year. Hence, the stock rating is downgraded to ‘Equal Weight’ from ‘Overweight’ with a price target of $11.
Kurtz reported that his scrap steel group anticipate a rebound in the scrap industry, while steel-buyer contacts expects healthy U.S. demand and supply; he projects utilization to touch 80% in 2017 compared to 73% in 2016, which he considers may result in another wave of mill price hikes.
