AK Steel Holding Corporation’s (AKS) Butler plant melted its first heat of steel at its new 175-ton capacity electric arc furnace (EAF) on March 4, 2011. Additionally, a new ladle metallurgy furnace (LMF) has also begun processing steel at the Butler Works, where electrical, stainless and carbon steels products are produced.
The addition of EAF and LMF are part of a $180 million modernization plan undertaken over the past several years at AK Steel’s specialty steel operations.
With the new furnace, the company will be able to produce roughly 400,000 tons of additional carbon slabs. The added production capability will offer significant savings when the facility is running at capacity.
In October 2007, the company had announced a $180 million project, of which most of the capital investment was made at the Butler Works.
However, the construction was delayed for about two years while the company worked to secure permits from the state for the project, which is increasing the facility’s capacity by roughly 50% and replacing three 1960s vintage electric arc furnaces with one new furnace.
In January, AK Steel reported its fourth-quarter results incurring an adjusted after-tax loss of $54.5 million or 49 cents per share, outperforming the Zacks Consensus Estimate of loss of 62 cents per share.
Fourth-quarter results excluded one-time items of $63.7 million pre-tax charge related to the earlier announced AK Steel Holding Corporation and $9.1 million pre-tax charge pertaining to a retiree benefit settlement associated with the company’s Butler Works.
Including these special items, the company reported a loss of $98.3 million or 89 cents per share compared with a net income of $39.8 million or 36 cents per share in the prior-year quarter.
AK Steel expects an increase of 7% quarter over quarter in the first quarter of fiscal 2011 leading to 1,450,000 tons and approximately 8% quarter-over-quarter increase in its average per-ton selling price compared with the fourth quarter price level. The expected increase is attributable to the anticipated higher contract and spot market prices and better product mix.
For iron ore, scrap and coal, the company expects higher price of raw material, likely to be offset by an improved operating performance. At the operating level, the company expects to break even for the first quarter of fiscal 2011.
Ohio-based AK Steel Holding Corporation is a leading producer of flat-rolled carbon, stainless, electrical steel and tubular products. It operates 7 steel-making and finishing plants in Ohio, Pennsylvania, Indiana and Kentucky. The company competes with Nucor Corporation (NUE) and Steel Dynamics Inc. (STLD).
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