You know you're operating in a strong industry when you're confident enough to raise prices on some of the key products.
Although the steel industry still has a long way to go to return to its robust levels, AK Steel Holding Corporation (AKS) is not wasting any time trying to squeeze out as much profit as it can while it waits for the eventual recovery. On Tuesday, the West Chester, Ohio-based company announced that it will raise current spot market base prices for all carbon flat-rolled steel products by a minimum of $40 per ton, effective immediately with new orders. (See also: Why AK Steel Stock Surged 32% Last Week.)
Steel manufacturers have posted strong gains in the wake of Donald Trump's surprise victory for the White House. The optimism surrounding steel stocks has sent the Market Vectors Steel ETF (SLX) soaring some 15% in the past five trading sessions. But beyond the potential boost from a Trump presidency, AK Steel could be signaling the outcome of the Commerce Department's investigation into imports of stainless steel sheets from China. (See also: Donald Trump's Wall Could Boost Steel Stocks.)
Last week, the Commerce Department revealed its preliminary finding that Chinese imports were flooding U.S. markets at below fair value. AK Steel was among a list of companies that urged the U.S. International Trade Commission to launch an investigation, alleging unfair dumping of flat-rolled products. Could it be a coincidence that a week later AK Steel has decided to raise prices on its own flat-rolled steel products? (See also: China Steel Probe Boosts US Steelmakers.)
To date, AK Steel, which has beaten Wall Street's earnings estimates in five straight quarters, has done a stellar job navigating the tough steel environment. With the company now projecting enough confidence in its products and its financial position by raising prices, AK Steel could still be a solid way to play the recovery in commodities.
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