Scrap prices have increased marginally because scrap demand has increased and mills are trying to build up inventory before the winter season. However, overall steel demand remains depressed and we believe AK Steel (AKS) is facing a double-edged sword as costs increase and demand remains depressed. We maintain our sell rating on AKS.
Since the last time we wrote on AK Steel, the steel manufacturer has announced that it will increase prices of some of its flat rolled products, (200, 300 and 400 series flat rolled stainless steel products) effective from shipments on December 30, 2012. This was AK Steel's second price increase in one week. On November 5th, AKS announced, with immediate effect, a $50 per ton increase in spot market base price for carbon flat-rolled steel products, mainly used in automobiles and appliances industries.
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