West Chester, Ohio-based flat-rolled steelmaker AK Steel reported net income of $33.1 million in Q2 2011 compared to $26.7 million in Q2 2010 and net income of $8.7 million in Q1 2011. Higher selling prices drove the increase as the average selling price in Q2 2011 was $1,185/nt-a 7 percent increase over Q1 2011 and about 8 percent higher than the $1,101/nt reported in Q2 2010. Net sales were up as well, totaling $1.79 billion on shipments of 1.5 million tons, compared to sales of $1.59 billion on shipments of 1,449,400 tons in Q2 2010.
Q2 2011 was the best quarter for AK Steel in about three years as shipments rose to the highest level since Q2 2008, although Q2 results did fall short of earlier earnings guidance due to higher iron ore prices and fewer and less expensive spot market carbon shipments and prices. Due in particular to high iron ore costs, AK Steel's President and CEO James L. Wainscott announced plans to raise contract prices in order to recover iron ore costs. Wainscott said that each new contract will include a provision for "recovering a significant portion" of iron ore costs, and predicted that iron ore prices will remain high through the end of the year. AK Steel buys close to 6 million tons of iron ore pellets per year, according to Wainscott.
Although he gave no concrete details, Wainscott said that AK Steel has been "in talks" with regards moving into the iron ore business in a possible joint venture, and AK may have an "announcement to make in the near term."