AK Steel, peers shoot higher as cold-rolled trade case filed
Jul. 28, 2015 2:25 PM • SA Editor Carl Surran
AK Steel (AKS +13.5%) soars despite a mixed Q2 earnings report, after joining domestic steel producers U.S. Steel (X +5%), Nucor (NUE +2.2%), Steel Dynamics (STLD +6.9%) and Arcelor Mittal (MT +5.4%) in filing a trade case against steel dumping by eight countries related to cold-rolled steel products.
The news apparently made investors optimistic that AKS can overcome low steel prices, which caused the company to miss Wall Street’s EBITDA forecasts.
KeyBanc analyst Philip Gibbs notes that based on comments on the AKS earnings conference call, hot-rolled and stainless steel trade cases look likely.
AKS says Q2 shipments totaled 1.811M tons vs. 1.75M in Q1 and 1.39M in Q2 2014, and expects to generate improved results for Q3 and H2 relative to their comparable periods a year ago, citing anticipated higher shipments, improving carbon steel spot market prices, increased production levels resulting in lower per ton operating costs, and the continuing benefit of lower raw materials costs, particularly iron ore.
Citi analysts believe AKS likely will continue to struggle to post positive free cash flow absent a sharp price recovery.