On Tuesday, West Chester, Ohio-based flat rolled steelmaker AK Steel reported a net loss of $230.4 million for Q4, following a $60.9 million net loss in Q3 and a $193.9 million loss in Q4 2011. This was AK Steel's sixth consecutive quarterly loss. In Q4 2012, sales were $1.42 billion on shipments of 1,406,000 tons, compared to sales of $1.51 billion on shipments of $1,409,000 tons for the year-ago Q4. The company said its average selling price for Q4 was $1,011 per ton, approximately 6 percent lower than the $1,070 per ton reported for Q4 2011 and the $1,073 per ton reported for Q3 2012. The lower average selling price for Q4 2012 compared to Q4 of 2011 was primarily due to lower spot market prices for carbon steel products and reduced raw material surcharges.
So far in Q1 2013, AK Steel executives commented that spot activity from service centers has picked up in the carbon market following three price increases in Q4, and a $2.00 cwt. ($44/mt or $40/nt) price increase last Monday. While the company is attempting to attain the full $2.00 cwt., the flat rolled spot market remains "very competitive" and AK Steel is going after many of the same orders as its competitors. Nonetheless, hot rolled coil (HRC) spots are now above $30.00 cwt. ($661/mt or $600/nt), which is better than what prices were recently.
For the full year, AK Steel reported a net loss of $1.03 billion compared to a net loss of $155.6 million, for 2011. Sales for 2012 were $5.93 billion, a decrease of 8 percent compared to $6.47 billion for 2011. Shipments for 2012 were 5.4 million tons, a decrease of 5 percent compared to 5.7 million tons in 2011 as a result of a weaker carbon spot market. The company said its average selling price for full-year 2012 was $1,092 per ton, approximately 3 percent lower than the $1,131 per ton reported for 2011. The lower average selling price for full-year 2012 was primarily due to lower spot market selling prices and reduced raw material surcharges.
Earnings for 2012 were negatively affected compared to 2011 by the decrease in shipments and spot market selling prices along with higher coke costs. This negative impact was partially offset by decreases in costs for carbon scrap, iron ore and energy.
James L. Wainscott, Chairman, President and Chief Executive Officer of AK Steel discussed the company's growing share in the automotive market, and touched on a topic he said has been discussed often lately: the substation of aluminum and other products for steel in automotive manufacturing. Wainscott said that in one form or another, steel makes up about 60 percent of the weight of a vehicle and steel available for car companies is up to five times stronger than it was in years past. He added that using steel is less expensive than aluminum and noted that even major aluminum producer Alcoa acknowledged that it requires as much as $600-$700 more to use aluminum in certain aspects. Even though aluminum will continue to play a role, Wainscott explained that the role of steel will be superior.