AK Steel (NYSE:AKS) will likely swing to a second-quarter profit from a loss last period on climbing demand that has helped lift shipments, but said the market still remains volatile and uncertain, especially in the near term.
The West Chester, Ohio-based steel producer forecast on Monday earnings between 4 and 6 cents for fiscal 2012’s second period, up from a loss of 11 cents in the quarter prior.
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Total shipments should be slightly higher, around 1.35 million tons, while average per-ton selling prices are expected to be about the same. The company expects to benefit from higher operation rates and lower raw material costs.
However, AK Steel would not provide forecasts for the remaining quarters of 2012, citing volatility related to near-term economic conditions, a recent deterioration of spot market pricing and increased uncertainty.
Jefferies cut AK Steel’s price target to $6 from $8 on a hold rating earlier on Monday. The brokerage also slashed ratings on Commercial Metals (NYSE:CMC), United States Steel (NYSE:X), Steel Dynamics (NASDAQ:STLD), Olympic Steel (NASDAQ:ZEUS) and Schnitzer Steel (NASDAQ:SCHN).
Shares of AK Steel opened on Monday down more than 3%, close to a 52-week low.
Still, the company said its Magnetation joint venture continues to ramp up operations and AK Steel may be able to obtain iron ore pellets from the venture earlier than 2015, which it had previously estimated.
AK Steel is also optimistic that it is ahead of schedule to produce coal from its wholly-owned subsidiary AK Coal Resources, which is currently developing mining operations.