Boston, MA 04/09/2014 (wallstreetpr) – AK Steel Holding Corporation (NYSE:AKS) announced that it will increase the price of one of its steel products. The news lifted the shares of the company in the last session as investors moved to buy into the potential.
In the cyclical steel industry, the company has been trying to ensure stable cash flow and growth. And it is hoping to achieve this by adjusting various aspects of its business. The move to raise price on a key steel product is expected to help the company in generating higher revenue.
The demand for steel is impacted by issues such as global competition, health of global economies and demand from China.
Keeping aluminum out of automotive market
AK Steel Holding Corporation (NYSE:AKS) is trying to deal with global competition by increasing focus on specialty products that attract higher profit margins. In the anticipated changes in auto manufacturing where achieving fuel efficiency in vehicles is the major issue, demand for specialty steel products is expected to increase.
Focusing one specialty products which attract higher prices will be able to help AK Steel Holding Corporation (NYSE:AKS) to deal with the impact of aluminum usage in vehicle bodies. Major automakers such as Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) have shown indication of switching to aluminum in some of their vehicle construction. But the move is not expected to be that fast. Also, availability of specialty steel that can help the automakers produce fuel compliant vehicles will mean continued use of steel in vehicle bodies.
Defending auto market
AK Steel Holding Corporation (NYSE:AKS) generated majority of its revenue from automotive sales in 2013. Automotive sales contributed 51 percent of 2013 revenue, up from 45 percent in 2012. That a significant portion of revenue is drawn from the automotive market means that the company must defend its auto market share.
The anticipated boom in the auto industry, this year, presents an opportunity for AK Steel to make up for what it lost last year. A combination of price adjustment and production of specialty products for the auto market should help the company in wrestling the market from aluminum.
