Case Study: AK Steel Holding Corporation
AK Steel Holding Corporation
AK Steel (NYSE: AKS) has got a perfect start for 2016, with its shares gaining more than 83% so far this year. This strong momentum in the share price performance can be attributed to the recent rally in steel prices along with the strong financial and operating performance in the fourth-quarter of 2015.
Steel prices shot up to the tune of 8% to 27% across the world in 2016. For instance, The United States HRB spot price rose by 10% to the current level of $466 per metric tonne from $425 per metric tonne in the first week of January this year. In the interim, Western Europe and China ex-works HRB spot price rallied 8% and 27% to current level of $390 and $320 per metric tonne from $362 and $251 per metric tonnes …show more content…
More importantly, the steel price will be able to sustain its rally due to two reasons in the U.S. First, further reductions in steel capacity in China and second, impose of anti-dumping duties in the U.S. As per a report by Bloomberg, the Chinese government recently decided to further reduce its steel capacity to the tune of 100 million tons to 150 million tons in 2016. This reduction in steel production capacity means that the steel producers in China will no longer be able to dump steel into other markets such as U.S at a cheap rate, with their reduced capacities for steel productions.
Meanwhile, the U.S Commerce Department has recently admitted that it will slap anti-dumping duties on certain hot-rolled steel products from seven countries such as Australia, Brazil, Japan, Korea, the Netherlands, Turkey and the United Kingdom in a preliminary ruling that followed a complaint by U.S. steelmakers in …show more content…
In fact, the Americans on an average spent more for the auto, with overall spending of nearly $570 billion on new rides. Thus, the auto sales in the U.S have improved on the back of cheap gasoline, employment gains and low interest rates. The most important thing is that this momentum in auto sales is continuing in 2016, as shown in the chart below. This should allow A.K. Steel to improve its top line performance in 2016, given the fact that AKS is diversifying its products with the higher value added product
AK Steel (NYSE: AKS) has got a perfect start for 2016, with its shares gaining more than 83% so far this year. This strong momentum in the share price performance can be attributed to the recent rally in steel prices along with the strong financial and operating performance in the fourth-quarter of 2015.
Steel prices shot up to the tune of 8% to 27% across the world in 2016. For instance, The United States HRB spot price rose by 10% to the current level of $466 per metric tonne from $425 per metric tonne in the first week of January this year. In the interim, Western Europe and China ex-works HRB spot price rallied 8% and 27% to current level of $390 and $320 per metric tonne from $362 and $251 per metric tonnes …show more content…
More importantly, the steel price will be able to sustain its rally due to two reasons in the U.S. First, further reductions in steel capacity in China and second, impose of anti-dumping duties in the U.S. As per a report by Bloomberg, the Chinese government recently decided to further reduce its steel capacity to the tune of 100 million tons to 150 million tons in 2016. This reduction in steel production capacity means that the steel producers in China will no longer be able to dump steel into other markets such as U.S at a cheap rate, with their reduced capacities for steel productions.
Meanwhile, the U.S Commerce Department has recently admitted that it will slap anti-dumping duties on certain hot-rolled steel products from seven countries such as Australia, Brazil, Japan, Korea, the Netherlands, Turkey and the United Kingdom in a preliminary ruling that followed a complaint by U.S. steelmakers in …show more content…
In fact, the Americans on an average spent more for the auto, with overall spending of nearly $570 billion on new rides. Thus, the auto sales in the U.S have improved on the back of cheap gasoline, employment gains and low interest rates. The most important thing is that this momentum in auto sales is continuing in 2016, as shown in the chart below. This should allow A.K. Steel to improve its top line performance in 2016, given the fact that AKS is diversifying its products with the higher value added product