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Why AK Steel’s Average Selling Prices Could Outperform Peers

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Jun. 3 2019, Published 1:33 p.m. ET

Average selling prices

US steel prices rose to multiyear highs in the first half of 2018. However, steel prices pared some of their gains in the second half of the year. Falling spot steel prices had a negative impact on steel companies’ first-quarter ASP (average selling price).

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Comparative analysis

ArcelorMittal’s (MT) first-quarter ASP fell 3.1% sequentially to $744 per metric ton. The company’s ASP in NAFTA fell 1.6% during the same period. Steel Dynamics (STLD) reported a 4.0% sequential fall in its first-quarter ASP. Nucor’s (NUE) first-quarter ASP fell 4.1% compared to the fourth quarter. Nucor reported the biggest sequential fall in its first-quarter ASP among the steel companies that we’re discussing in this series.

U.S. Steel Corporation’s (X) flat-rolled segment reported an ASP of $798 per ton in the first quarter—a sequential decline of 3.1%. While other steel companies reported a sequential fall in their first-quarter ASPs, AK Steel’s (AKS) first-quarter ASP rose marginally to $1,112 per ton.

AK Steel

AK Steel sells most of its steel to contract customers. Most of the contracts roll over at the beginning of the year. Higher contract pricing helped AK Steel’s ASPs in the first quarter even as other steel companies reported lower ASPs amid falling spot steel prices.

AK Steel’s ASP growth could outperform other steel companies in the second quarter due to the sharp fall in spot steel prices. Since AK Steel has minimal spot exposure, it isn’t impacted much by the volatility in spot steel prices. While AK Steel could outperform its peers on the ASP, it faces several other challenges. To learn more, read Why Credit Suisse Double Downgraded AK Steel.

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