U.S. Steel Producers Rally Around Price Hikes
January 30 2018 - 1:54PM
Dow Jones News
By Adrienne Roberts
Steel makers such as AK Steel Holding Corp. and Nucor Corp. are
betting on price increases to boost profits in 2018, despite
concerns about seeing growing sales of cheaper imports.
Nucor said Tuesday in its fourth-quarter earnings report that
steel imports increased by 15.5% in 2017 compared with a year
earlier and account for about 27% of the U.S. market. The company
said it is pursuing trade cases to combat unfairly traded
imports.
Steel companies have long complained that countries such as
China, South Korea, Turkey and Vietnam sell steel in the U.S. for
less than it costs to make.
Yet, U.S. steel companies continue to raise prices. Nucor
reported a 14% increase in average sales price per ton in the
fourth quarter from the prior year.
In its earnings release, Nucor said there is "significant
optimism in steel end use markets and (we) are encouraged by
positive pricing momentum building throughout the quarter for all
of our steel mill products."
Nucor is also expanding its production. The company plans to
build a new mill in Sedalia, Mo., to make steel reinforcing bar for
concrete used in buildings, bridges and highway projects. The
$250-million project will free up space at an existing Nucor mill
in Illinois where the company intends to spend $180 million to
expand production of long-length steel products.
Steel companies have been looking to the construction
sector--especially when it comes to infrastructure--for a boost in
2018 on hopes for a pickup in activity.
AK Steel was also able to secure price increases and expects to
see slightly improved margins in 2018, said Chief Financial Officer
Jaime Vasquez on the company's fourth-quarter earnings call
Tuesday. AK Steel said the average selling price per flat-rolled
steel ton for 2017 rose 7% from a year earlier.
"Even though our industry has received favorable rulings on
various steel trade cases, imports remain a significant challenge
as certain countries continue to gain the system," said AK Steel
Chief Executive Roger Newport on the earnings call Tuesday.
Nucor warned some of its price increases could be offset by
higher scrap prices and weather-related interruptions at some of
its sheet mills.
The Charlotte, N.C.-based manufacturer earned a fourth-quarter
profit of $383.9 million, or $1.20 a share, compared with $159.6
million, or 50 cents a share, for the same period a year
earlier.
AK Steel reported a loss of $107.9 million, or 34 cents a share,
compared with a loss of $62.4 million, or 22 cents a share, for the
same period a year earlier.
U.S. Steel Corp. is slated to report fourth-quarter earnings on
Wednesday.
--Bob Tita contributed to this article.
Write to Adrienne Roberts at adrienne.roberts@wsj.com
(END) Dow Jones Newswires
January 30, 2018 13:39 ET (18:39 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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