AK Steel Holdings Corp. (AKS) - Get AK Steel Holding Corporation Report shares rose more than 10% on Tuesday after the company reported better than expected earnings and caught an upgrade and price target increase from Argus research.
The firm posted net income of $61.2 million, or 19 cents a share in the second quarter compared to net income of $17.3 million, or eight cents a share a year ago.
AK shares added 11.3% Tuesday to trade at $6.72.
"Our second quarter performance highlights the continued benefits achieved through the strategic initiatives implemented during the past year and a half," said Roger K. Newport, Chief Executive Officer of AK Steel. "We are executing on the strategy that we laid out in early 2016 as further evidenced by our pending acquisition of Precision Partners. This step strengthens our position as a provider of value-added materials and design solutions."
Sales increased 4% to $1.56 billion for the second quarter of 2017 from $1.49 billion for the second quarter of 2016.
Second quarter shipments fell 6% to 1,465,200 tons compared to the second quarter a year ago, "primarily as a result of a decrease in automotive demand."
AK said its average selling price per ton rose 11% to $1,058 from $957 in the same quarter a year ago, primarily as a result of a higher average selling price on both contract and spot market sales and higher surcharges on specialty steel products. Results for the second quarter of 2017 included a LIFO charge of $23.9 million, compared to a LIFO charge of $20.7 million in the second quarter a year ago.
Steel companies have traded with a lot of volatility in the last several months as President Donald Trump is considering quotas and tariffs to deal with steel dumping from China and other countries, despite warnings from leading economists and many within his own orbit that such a maneuver could have damaging consequences.
Former Federal Reserve Chairmen Ben Bernanke and Alan Greenspan and other top economists urged the president against imposing new tariffs on foreign steel imports to the United States in a letter published by the American Action Forum on Wednesday. Fifteen former chairs of the White House Council of Economic Advisers in warned that additional tariffs would damage diplomatic relations and the U.S. economy. They said tariffs would raise costs for manufacturers, reduce employment in manufacturing and increase prices for consumers.
Other steel makers tagged along for the ride as Allegheny Technologies Inc. (ATI) - Get Allegheny Technologies Incorporated Report rose 9%, Timken Steel Corp. (TMST) - Get TimkenSteel Corp Report added 5.3% and U.S. Steel Corp. (X) - Get United States Steel Corporation Report added 4%