AK Steel Holding Corporation (NYSE:AKS) is set to benefit from recent favorable rulings affecting the U.S. steel market. Investigations by industry regulators have shown that a number of countries exporting their steel products are hurting domestic producers by engaging in unfair trade practices. U.S. steel producers such as AK Steel have been struggling to compete against cheap steel sold in the U.S. from countries such as Brazil, Russia and China.
Steep tariffs for China’s steel exports
A probe by the U.S. Commerce Department has shown that stainless steel sheets imported into the U.S. from China are sold at below fair value. The result of that is that the cheap stainless steel sheets from China are flooding the U.S. and consequently frustrating local producers who are unable to compete fairly.
To protect domestic actors such as AK Steel Holding Corporation (NYSE:AKS), the department has decided to slap Chinese stainless steel exports with steep anti-dumping tariffs. Preliminary tariffs to deter Chinese exporters from flooding the domestic market have been set in the range of 63.86% to 76.64%.
AK Steel Holding alongside other affected U.S. producers such as Outokumpu Stainless USA LLC and ATI Flat Rolled Products raised the alarm over dumping of Chinese products in the U.S. As such, the decision by the Commerce Department to slap Chinese stainless steel with anti-dumping duties favors AK Steel and its peers.
Leveling playing field in hot-rolled steel market
In another favorable ruling, the International Trade Commission (ITC) confirmed anti-dumping duties for hot-rolled steel products being imported into the U.S. The duties affect steel coming from Australia, Brazil, the U.K., Japan, South Korea, the Netherlands and Turkey. Hitting these upside products with anti-dumping tariffs should level the playing field for AK Steel and its U.S. peers, thus enabling to enjoy better prices and margins on their sales.
A resilient business?
Despite all the challenges created by cheap steel products flooding the U.S. market, AK Steel Holding Corporation (NYSE:AKS) has continued to impress and surprise on the upside with its earnings. The company delivered a pleasant surprise in 2Q2016 when it posted EPS of $0.08 against the expectation of $0.02. AK Steel’s earnings have exceeded expectations in several of the last five has beat.