Steel makers such as AK Steel Holding Corp. and Nucor Corp. are betting on price increases to boost profits in 2018, despite concerns about seeing growing sales of cheaper imports.
Nucor said Tuesday in its fourth-quarter earnings report that steel imports increased by 15.5% in 2017 compared with a year earlier and account for about 27% of the U.S. market. The company said it is pursuing trade cases to combat unfairly traded imports.
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Steel companies have long complained that countries such as China, South Korea, Turkey and Vietnam sell steel in the U.S. for less than it costs to make.
Yet, U.S. steel companies continue to raise prices. Nucor reported a 14% increase in average sales price per ton in the fourth quarter from the prior year.
In its earnings release, Nucor said there is "significant optimism in steel end use markets and (we) are encouraged by positive pricing momentum building throughout the quarter for all of our steel mill products."
Nucor is also expanding its production. The company plans to build a new mill in Sedalia, Mo., to make steel reinforcing bar for concrete used in buildings, bridges and highway projects. The $250-million project will free up space at an existing Nucor mill in Illinois where the company intends to spend $180 million to expand production of long-length steel products.
Steel companies have been looking to the construction sector--especially when it comes to infrastructure--for a boost in 2018 on hopes for a pickup in activity.
AK Steel was also able to secure price increases and expects to see slightly improved margins in 2018, said Chief Financial Officer Jaime Vasquez on the company's fourth-quarter earnings call Tuesday. AK Steel said the average selling price per flat-rolled steel ton for 2017 rose 7% from a year earlier.
"Even though our industry has received favorable rulings on various steel trade cases, imports remain a significant challenge as certain countries continue to gain the system," said AK Steel Chief Executive Roger Newport on the earnings call Tuesday.
Nucor warned some of its price increases could be offset by higher scrap prices and weather-related interruptions at some of its sheet mills.
The Charlotte, N.C.-based manufacturer earned a fourth-quarter profit of $383.9 million, or $1.20 a share, compared with $159.6 million, or 50 cents a share, for the same period a year earlier.
AK Steel reported a loss of $107.9 million, or 34 cents a share, compared with a loss of $62.4 million, or 22 cents a share, for the same period a year earlier.
U.S. Steel Corp. is slated to report fourth-quarter earnings on Wednesday.
--Bob Tita contributed to this article.
Write to Adrienne Roberts at email@example.com
(END) Dow Jones Newswires
January 30, 2018 13:39 ET (18:39 GMT)
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