AK Steel Holding Corporation (NYSE:AKS)’s carbon flat-rolled steel products will now cost more. The company is raising prices of the products by at least $30 a ton and the changes are taking effect immediately. That means that new orders will be subject to the hiked price, thus generating more revenue for the company.
Though AK Steel didn’t explain why it is raising prices of carbon flat-rolled steel products, the move typically signal improving market conditions. Perhaps the U.S. steel market is starting to see improving demand following tariff increases to curb dumping of cheap steel imports.
Improving conditions in construction, automotive, appliance and energy markets are also seen as incentives for price hikes by U.S. steel companies. The stunning decision by OPEC members to limit oil production to stabilize prices could reignite activity in the energy sector, boosting demand for steel.
Protest over cheap Chinese steel selling in the U.S.
U.S. steel makers including AK Steel, Nucor Corporation (NYSE:NUE), and United States Steel Corporation (NYSE:X) have been up in arms against their Chinese counterparts, accusing them of destroying steel prices through illegal dumping. The protests saw U.S. Department of Commerce move to slap Chinese steel imports into the U.S. with heavy tariffs.
The move led to a drop of China’s steel export and reduced competition for AK Steel and its U.S. peers. The pressure on Chinese steel exporters to stop unfair trade practice of flooding the U.S. market with cheap products may have led to spike in demand that AK Steel is now keen to capitalize on.
But claims have recently surfaced that China could be cheating the U.S. anti-dumping system by selling its cheap steel in the country through Vietnam. AK Steel, Nucor Corporation (NYSE:NUE), and United States Steel base their fresh claims against Chinese steel makers on suspect shift in the source of steel inflow into the U.S. They say that immediately the U.S. slapped Chinese steel exporters with steep tariffs, steel imports from China dropped drastically while steel imports from Vietnam rose.
Besides China, U.S. steel manufacturers have also accused Brazil and Russia of flooding the domestic market with cheap products.
A series of price hikes
AK Steel has raised prices of its steel products several times this year. The company in March increased the prices of its carbon flat-rolled steel by $30 a ton, following in the footsteps of its industry peers Nucor Corp, ArcelorMittal SA (ADR) (NYSE:MT) and U.S. Steel Corp that had earlier made a similar move.
AK Steel also boosted prices of its steel products by $30 a ton in January.
