Kentucky Legislature Offers Incentives To AK Steel Holding Corporation (NYSE:AKS) To Restart Operations

735

AK Steel Holding Corporation (NYSE:AKS) temporarily idled its Ashland Works blast furnace in December 2015 leading to the layoffs of 615 employees. The legislature of Kentucky passed a bill in April to give incentives to its reopening. The bill was made law on April 13 by Kentucky governor Matt Bevin.

The bill notes that the expenditure of restarting an idled blast furnace will qualify for the Kentucky Industry Revitalization Act. As per the bill, property utilized in running a blast furnace is exempted from the Sales and Use tax.

The plant at Ashland was idled due to what AK Steel terms a surplus of unfairly priced steel imports from overseas, AKA too much competition. A spokeswoman said those conditions still exist.

Click Here For More Market Exclusive Updates & Analysis

Spokeswoman Lisa Jester said that AK Steel is examining the domestic as well as the global market environment. The market has not improved enough to permit the company to reopen the furnace.

Roger Newport, AK Steel’s CEO spoke about the adverse effect China had on the domestic steel industry. China has significantly increased the quantity of steel it produces which in turn has shot up China’s exports as well. It manufactures around 900 million tons of steel every year, that is nine times what is manufactured in the US. China’s domestic consumption is approximately 480 million tons, leaving a surplus of 420 million tons. This results in it dumping low cost steel in other markets which is adversely affecting companies such as AK Steel.

On Tuesday stories of laid off steelworkers’ families and adverse economic effects of mass layoffs were recounted to DC trade members by Ashland economic chiefs. Ashland Mayor Chuck Charles as well as Ashland Alliance President Tim Gibbs took part in several meetings and spoke to the International Trade Commission for eight hours urging anticompetitive protectionist tariffs to be put on imported steel.

A temporary 237% tax on imports from China assisted the American steel market recovery at the expense of steel consumers. However other nations are being utilized by China to get around the tax. It remains to be seen how American steel producing companies survive in spite of China’ s efforts to outcompete them.

An ad to help with our costs