AK Steel, Steel Dynamics Expecting Low-Cost Imports to Weigh Down Fourth-Quarter Results
12/18/2015 - AK Steel Corp. said it expects to report a greater-than-anticipated net loss of between 33 cents and 38 cents per share in the fourth quarter, due in part to costs associated with idling its Kentucky blast furnace.
The consensus had been a loss of 15 cents per share.
In a statement, the company said its quarterly results will include charges of approximately US$32 million, or 18 cents per diluted share, for supplemental unemployment and other employee benefit costs, as well as other costs incurred to idle the steel works.
It also said it estimates that it will cost US$2 million to US$3 million monthly to keep the facility in mothballs.
However, those costs are likely to be offset by cost-reduction measures; higher operating rates at the blast furnaces at its Middletown and Dearborn works; and a better product mix resulting from lower shipments to the carbon spot market.
The steelmaker said it expects stop have shipped approximately 1.6 million tons during the quarter, about 14 percent less than it did in the third quarter of 2015.
The lower shipments reflect AK Steel's decision to reduce sales to the carbon steel spot market due to the adverse impact on pricing from high levels of imported steel, it said.
Meanwhile, another U.S. steelmaker, Steel Dynamics Inc., said it expects low-cost imports, along with customer restocking and seasonally lower demand, to impact its fourth-quarter results.
Its earnings, it said, are expected to fall to between 3 cents and 7 cents per share, and its steel mills likely will report decreased shipments.
"The most significant decline is anticipated in the company's commodity-grade hot roll products," the company said in a statement. "Fourth quarter 2015 overall average steel product pricing is expected to decrease meaningfully, offsetting the savings derived from lower ferrous scrap costs."
Additionally, the company said it believes the value of its metals recycling operation is impaired, but it is still trying to determine by how much.