AK Steel: First-Lien Bonds At 80 And Unsecured Bonds At 35 May Rise Sharply
Swaraj Chowdhury, CFA
Swaraj Chowdhury, CFA
AK Steel: Unsecured Notes At 65 And Stock At $3 Are Attractive For Aggressive Investors
Swaraj Chowdhury, CFA • 10 Comments
Swaraj Chowdhury, CFA • 10 Comments
The Long Case For AK Steel Holding Corp.
Investment Capitalist • 22 Comments
Investment Capitalist • 22 Comments
Fri, Mar. 4, 5:22 PM
- The U.S. Commerce Department says it has launched a new investigation into imports of stainless steel sheet and strip from Chinese steelmakers, which could result in increased import tariffs on their goods.
- The probe was in response to a petition from companies including AK Steel (NYSE:AKS), which today increased its base prices for carbon flat-rolled steel products by a minimum $30/metric ton, a move similar to increases announced to customers by other big steelmakers, including U.S. Steel (NYSE:X), Nucor (NYSE:NUE) and ArcelorMittal (NYSE:MT).
- Earlier this week, the U.S. introduced preliminary import tariffs on cold-rolled steel from seven countries, including China, and is considering new duties on three other steel categories, following complaints of illegal dumping of steel in the U.S.
Fri, Mar. 4, 9:42 AM
- AK Steel (AKS +7.7%) says it will increase current spot market base prices for all carbon flat-rolled steel products by a minimum of $30/ton, effective immediately with new orders.
- AKS' Q4 sales fell 23% Y/Y to $1.54B as the average selling price dropped 5.3% to $929/ton.
- AKS already is up ~30% in three days since the U.S. government announced tariffs on steel imports from China and other countries.
Wed, Mar. 2, 2:47 PM
- Steel company shares are soaring following news of U.S. anti-dumping duties in the cold-rolled sheet trade case, with China receiving a 266% duty, which should effectively lock the country out of the U.S. market; Japan and Brazil were nailed with respective duties of 71% and 39%.
- J.P. Morgan analysts call the tariffs a win for U.S. steel stocks including U.S. Steel (X +22%), AK Steel (AKS +17.4%), Steel Dynamics (STLD +5.2%) and Nucor (NUE +2.6%), as trade cases filed by the U.S. and around the world eventually will close the door to the export market for surplus Chinese steel, and China will have to cut its steel capacity to come in line with Chinese domestic demand.
- With steel prices rebounding off of a bottom and the companies clearly demonstrating they have enough liquidity, J.P. Morgan believes the stocks should continue to outperform as shorts find it difficult to portray a possibility of near-term bankruptcies.
- Also: MT +11.7%, CLF +19.5%, CMC +1.2%, WOR +2.9%, ZEUS +13.2%, SLX +6.9%.
Tue, Mar. 1, 7:03 PM
- The U.S. government announces tariffs of 266% on steel imports from China, with goods from Brazil, India, South Korea, Russia, Japan and the U.K. subject to smaller duties.
- It is the second time since December that the U.S. government has penalized foreign steel producers, including Chinese mills, for selling steel in the U.S. at unfairly low prices.
- Analysts say the duties may not fully satisfy U.S. producers, as the 6.9% rate for South Korea, the second-largest source of the products, was far below what the industry alleged.
- Related Tickers: AKS, X, NUE, MT, CMC, STLD, WOR, ZEUS, SLX.
Tue, Feb. 9, 12:39 PM
- ArcelorMittal (MT -9.9%) chalks up another 52-week low, capping a 23% plunge in three days since delivering unwelcome news that it would raise $3B through a rights issue to reduce its debt burden after posting a ~$7.9B net loss last year.
- J.P. Morgan downgrades MT to Neutral from Overweight, citing a continued weak fundamental picture for global steel markets, with 2015′s price falls yet to trigger any significant capacity reductions, while also estimating a further 4% reduction in Chinese consumption in FY 2016.
- While the firm sees a better environment for U.S. steel stocks, their shares also are lower today: X -6.8%, AKS -6.3%, NUE -2.1%, STLD -3.2%.
Tue, Jan. 26, 11:38 AM
- AK Steel (AKS +6%) is sharply higher after Q4 earnings came in well above Wall Street expectations, as the company reduced its exposure to the spot markets as part of its effort to improve margins.
- Adjusted earnings do not include slightly more than $200M in total charges related to pension accounting and temporarily idling the company's Ashland Works blast furnace and steelmaking operations.
- Q4 shipments fell to 1.66M tons, down from 2.01M tons a year ago and 1.87M tons in Q3, which AKS attributes to its decision to focus on sales of higher margin products and reduce sales to the carbon steel spot market.
- AKS says its average selling price for Q4 was $929/ton, up 2% Q/Q, mostly attributable to a greater proportion of higher value steels sold to the automotive market and improved selling prices for electrical steels.
Tue, Jan. 26, 9:22 AM
Tue, Jan. 26, 8:35 AM
- AK Steel (NYSE:AKS): Q4 EPS of $0.30 beats by $0.24.
- Revenue of $1.54B (-23.0% Y/Y) beats by $40M.
- Shares +14.2% PM.
Mon, Jan. 25, 5:30 PM
Fri, Jan. 22, 12:33 PM
- Morgan Stanley analyst Evan Kurt expects steel prices to continue to rise and average $445/ton in 2016, which he says may result in downward revisions to Wall Street estimates for U.S. Steel (X -1.2%), AK Steel (AKS -1%) and Nucor (NUE +0.2%).
- Kurt calls Steel Dynamics "the safest way to play a modest steel market recovery,” while heavily shorted names such as X and AKS could squeeze into results, "but we would sell the news."
- The firm rates STLD at Overweight with a $27 price target, while X, AKS and NUE are all rated Equal Weight with respective targets of $19, $5 and $59; Cliffs Natural Resources (CLF -7.3%), rated Underweight with a $2 target, is called a “high cost producer in an oversupplied iron ore market.”
- "No need to own coal names into the quarter,” Kurt writes, as coal market conditions have deteriorated with a warmer than normal winter leading to large build-ups of coal inventories; he downgrades Consol Energy (CNX -0.8%) and Foresight Energy (FELP +11.4%) to Equal Weight with respective $29 and $12 price target.
Tue, Jan. 12, 6:58 PM
- AK Steel (NYSE:AKS) rose 5.8% in today's trade after the Department of Commerce imposed a 7.42% preliminary countervailing duty on hot-rolled steel imports from Brazil, which benefits U.S. steel producers; however, shares are -3.8% AH.
- The DoC says it did not find substantial import subsidizations for South Korea and Turkey; Chinese exporters were removed from the hot-rolled case because of the 90% tariff on their hot-rolled sheet exports to the U.S. for the past 14 years.
- The CVD will be added to anti-dumping duties to conclude the total tariff; preliminary anti-dumping determinations will be held February 23 and March 8.
- The petition was filed by AKS, ArcelorMittal (NYSE:MT), Nucor (NYSE:NUE), Steel Dynamics (NASDAQ:STLD) and U.S. Steel (NYSE:X).
Tue, Jan. 12, 5:37 PM
Dec. 23, 2015, 10:58 AM
- U.S. Steel (X -1.4%) and AK Steel (AKS -2.4%) are lower after preliminary anti-dumping tariffs levied on corrosion-resistant steel imports from China, India, South Korea and Italy turn out to be somewhat disappointing.
- The preliminary decision from the U.S. Department of Commerce sets duties of up to 256% on imports from China, while imports from India face duties of up to 6.9%, most Korean companies had duties set at up to 3.5%, most Italian firms had duties set at 3.1% and no tariffs were levied on Taiwan.
- AK Steel says it is pleased with the preliminary dumping margins assigned to China, but is disappointed that the dumping margins for India, Italy, Korea and Taiwan were not higher, "as they do not appear to adequately address the dumping that we believe is occurring in the U.S. market."
- BofA Merrill says the 256% tariff levied on China may grab headlines but already was expected, while the other levies mean those countries will be able to keep shipping to the U.S. "without much pain."
- Also: STLD +2%, NUE -0.2%, WOR +0.2%.
Dec. 18, 2015, 8:18 AM
- AK Steel (NYSE:AKS) -1.4% premarket after projecting a bigger than expected Q4 loss and lower shipments compared to Q3, mostly due to the ongoing effects in the carbon steel spot market from what the company believes are unfairly traded steel imports.
- AKS expects to post a Q4 loss of $0.33-$0.38, vs. the analyst consensus estimate of a $0.14, including $0.42 for charges related to the idling of blast furnace and related steelmaking operations at its Ashland, Ky., facility and $0.24 related to a writedown of its former insurance operations.
- AKS says it expects Q4 shipments of ~1.6M tons, down ~14% Q/Q.
Dec. 17, 2015, 11:42 AM
- U.S. Steel (X -8.9%), AK Steel (AKS -6.8%), Cliffs Natural Resources (CLF -8.7%) and Foresight Energy (FELP -3.6%) are all downgraded to Sell from Hold at Deutsche Bank, which says balance sheets in the segment have reached distressed levels amid constrained cash flows in the weak commodity price environment.
- Necessary capacity cuts could be slow in coming due to the "momentum and magnitude of new projects still ramping, natural currency hedges in a number of producing countries, continued cost-cutting, barriers to exit and social goals such as maintaining employment in countries such as China," the firm writes.
- In cutting its price target for AKS to $1 from $3, Deutsche Bank says it expects free cash flow to remain constrained for another two years, with the company forced to draw down on its revolver ($748M as of Q3) to fund part of its capex and interest expenses.
Dec. 17, 2015, 9:20 AM
AK Steel Holding Corp. is an integrated producer of flat-rolled carbon, stainless and electrical steels and tubular products through its wholly-owned subsidiary, AK Steel Corp. The company's operations consist primarily of nine steelmaking and finishing plants and tubular production facilities... More
Sector: Basic Materials
Industry: Steel & Iron
Country: United States
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