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Lower Steel Prices Dent AK Steel’s 4Q14 Earnings


Nov. 20 2020, Updated 12:20 p.m. ET

Lower steel prices

A key driver for companies like AK Steel, steel prices have come down in the last couple of months. Steel producers like Steel Dynamics (STLD) and Nucor (NUE) reported lower profits in 4Q14 due to this price decline. For Steel Dynamics, average selling prices came down by $34 per metric tonne (or Mt) over 3Q14.

Nucor’s fourth quarter average steel selling price came down by 2% as compared to 3Q14. It currently forms 2.52% of the Materials Select Sector SPDR ETF (XLB). Allegheny Technologies (ATI) is also a part of XLB.

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US Steel

Surprisingly, the average selling price for US Steel (X) was unchanged over 3Q14. The company attributes this to a higher percentage of value-added products in its sales mix and is part of US Steel’s Carnegie Way Program. You can learn more about US Steel’s 4Q14 earnings in our recent series “Key takeaways from US Steel’s 4Q earnings.”

AK Steel

AK Steel’s average steel selling prices are among the highest in the steel industry because it realizes a large portion of its revenues from value-added steel products. AK Steel sells stainless steel and electrical steel products, which sell at a higher price compared to standard steel products.

AK Steel’s average selling prices dropped by ~10% as compared to 3Q14, as explored in the previous article. Its revenues, however, increased by ~25% as compared to the previous quarter, due to shipments from its Dearborn Works facility. We will analyze the impact of Dearborn Works on AK Steel’s 4Q14 earnings in detail in our next article.


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