QUOTE AND NEWS
Benzinga  Oct 19  Comment 
CNBC Fast Money's Brian Kelly said on the segment of the sow called "Stock Pops & Drops" that he would take profits in Dollar Tree, Inc. (NASDAQ: DLTR) after the stock jumped 2.77 percent on Friday. Pete Najarian thinks that AK Steel Holding...
TheStreet.com  Oct 17  Comment 
NEW YORK (TheStreet) -- Shares ofaAK Steela were up 8.33% to $6.24 in early morning trading Friday afteraNomuraaupgraded the stock to "buy" from "neutral" and set a $10 price target. The firm said the company can earn $2 a share by...
Benzinga  Oct 17  Comment 
TheStreet.com  Oct 8  Comment 
NEW YORK (TheStreet) -- Shares ofaAK Steela plunged 8.13% to $6.61 in afternoon trading Wednesday after the U.S. government confirmed duties on steel imports after it determined the products were sold too cheaply in the U.S. AK Steel originally...
SeekingAlpha  Oct 5  Comment 
By Investment Capitalist: Where There's Blood, There's Opportunity A trickle of panic and hysteria was felt on Wednesday, October 1st as we witnessed a correlation spike to 1 across the market, resulting in an entanglement of stock price...
StreetInsider.com  Oct 2  Comment 
UPGRADES PMorgan raises Twitter, Inc. (NYSE: TWTR) from Neutral to Overweight and moves its price target from $54 to $64. Click Here for more color. Cowen upgrades Autodesk (Nasdaq: ADSK) from Market Perform to Outperform with a price target of...
TheStreet.com  Oct 2  Comment 
Story updated at 9:55 a.m. to reflect market activity. NEW YORK (TheStreet) --aAK Steel was upgraded to "buy" from "hold" by Deutsche Bank on Thursday. Shares of AK Steel gained 2.1% to $7.40 in morning trading. The analyst firm set a price...
TheStreet.com  Sep 30  Comment 
NEW YORK (TheStreet) -- AK Steel shares closedadown 3.61% to $8.01 on Tuesday alongsideathe decline of fellow steel company U.S. Steel after a bleak note from Axiom Capital, which warned that U.S. Steel could be facing troubled waters ahead. ...
SeekingAlpha  Sep 25  Comment 
By Wall Street Playbook: After years of underperformance and seemingly left for dead, steel stocks have come roaring back to life. Among them, AK Steel (NYSE:AKS), which has surged as high as 70% since June. And some experts believe these gains...
TheStreet.com  Sep 17  Comment 
NEW YORK (TheStreet) -- Shares ofaAK Steel rose 3.22% to $9.95 in morning trading Wednesday after the company announced it had completed its acquisition ofaSeverstal North America's integrated steelmaking assets located in Dearborn, MI. The...
StreetInsider.com  Sep 16  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/AK+Steel+%28AKS%29+Completes+%24707M+Acquisition+of+Severstal+Dearborn/9837170.html for the full story.




 

AK Steel Holding Corporation (NYSE:AKS) is a fully-integrated manufacturer of steel, including flat-rolled carbon, tubular products, and electrical and stainless steels. AK Steel Holding has seven steelmaking and finishing facilities in Indiana, Pennsylvania, Kentucky, and Ohio, while AK Tube LLC, a subsidiary, has operations in Indiana and Ohio[1]. AK Steel's operations also include European trading companies that buy and sell steel products.

Business Overview

Business & Financial Metrics[2]

In 2009, AKS incurred a net loss of $74.6 million on revenues of $4.08 billion. This represents a turnaround from 2008, when the company earned $4.0 million on $7.64 billion in revenues.

Business Segments

AKS operates in a single business segment which produces carbon and steel products.[3]

Key Trends & Forces

Steel Industry’s Cyclical Nature: The U.S. Steel industry is traditionally very cyclical and closely connected to the overall state of the general U.S. economy. A significant downturn in the U.S. economy may lead to a noteworthy decline in the demand of steel products.[4]

Contract v Spot Pricing: Sales in the steel industry usually fall within two categories: fixed price contracts typically renegotiated twice a year, or spot market transactions. Depending on a collection of different variables that affect the state of the steel industry (steel prices, prices for raw materials, supply and demand, etc.), both can be beneficial or detrimental to the company that uses them.

It is estimated that 70-80% of AK Steel’s revenues are based on fixed price contracts (the company does not publish exact information). This is advantageous when spot market prices decline over the duration of the contract, and contracts have been negotiated in the company’s favor.

Prices of Essential Raw Materials The profitability of the steel sector is closely tied to the prices of necessary raw materials. Considering the steel industry, these materials include (but are not limited to) iron ore, coal, coke, oxygen, chrome, nickel, silicon, molybdenum, zinc, limestone, carbon, stainless steel scrap, etc. Depending on the holdings of each firm, drastic changes in the prices of these raw materials can have profound effects on revenues and profits[5]. .

Exposure to Other Industries: The U.S. steel industry is gradually becoming further specialized in certain markets within the general steel market. As a result, steel producers are becoming increasingly reliant on the state of their specialized markets.

AK Steel focuses much of its production towards the U.S. automotive sector and the stainless and electrical steel markets. In recent years, the U.S. automotive industry has been experiencing multiple challenging years, while the stainless steel market has lately been undergoing significant pressures[6]. .

Globalization of the Steel Industry: The U.S. steel industry is increasingly being forced to compete with foreign companies, particularly China. China is expected to become a net exporter of steel in the very near future, placing further pressure on domestic producers. The American Iron and Steel Institute (AISI) has reported that applications for the import of steel has been continually increasing.

Competition

AK Steel's operations are focused in the United States whereas some of its larger competitors have a larger international presence. When compared to its closest competitors, AK Steel has significantly more fixed price contracts versus spot market sales. This can either work to the company's advantage or disadvantage given certain changing variables such as steel prices. Furthermore, AK Steel’s sales productions are focused towards the U.S. automotive and stainless steel markets, making its success related to the success of those industries. AKS is in a relatively less favorable position concerning the acquisition of raw materials because its closest integrated steel competitor, US Steel (X), has significant self-sufficiency concerning |iron ore and metallurgical coal; on the other hand, AK Steel does not have the same level of these materials [7]. Also, AKS has more significant pension obligations and post-retirement liabilities than its competitors, although the company has successfully been working to decrease them.

The company's most significant competitors are:

References

  1. AKS 2006 10K, Item 1, pg. 1
  2. AKS 2009 10-K pg. 13  
  3. AKS 2009 10-K pg. 52  
  4. AKS 2006 10K, Item 1a, pg. 6
  5. AKS 2006 10K, Item 1a, pg. 7
  6. AKS 2006 10K, Item 1a, pg. 6-7
  7. AKS 2006 10K
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