AK Steel advised their customers late on Monday of their intention to increase base prices on all flat rolled products (hot roll, cold roll & galvanized) by $60 per ton ($3.00/cwt). At the same time the mill advised of a revision in their galvanized coating extras (charges for adding zinc onto the steel substrate).

Steel Market Update has been advising our members in our newsletter to anticipate these pricing moves over the past few weeks as both scrap and zinc costs escalated.

AK Steel is the first mill to "officially" take their hot rolled base prices above $600 per ton as the mill was reported to be at $560 per ton ($28.00/cwt) on hot rolled prior to this increase. Their new pricing will be $620 per ton ($31.00/cwt) if accepted by the market.

Galvanized base prices in the U.S. market had been in the $35.00/cwt base range ($700 + extras) and the new base prices are projected to be $38.00/cwt ($760 + extras).

After a quick comparison of the old AK Steel galvanized coating extras to the new SMU is finding the increases to be between 15%-17%. The impact on .060" G90 galvanized is an increase from $3.05/cwt to $3.65/cwt (16.5%). For .019" G90 galvanized the old extra was $10.20/cwt and the new extra is $12.20/cwt (16.4%).

However, to get the full affect of the price increase on hot-dipped galvanized you need to add both the base price increase of $60 per ton with the new extras. Therefore, the impact to .019" G90 galvanized will be an increase of $6.00/cwt ($60 + $40) which is $120 per ton.

Here is a copy of the original press release from AK Steel:

West Chester, OH, January 11, 2010—AK Steel (NYSE: AKS) said today that it will increase spot market base prices by $60 per ton, effective immediately with all new orders for its carbon steel products.

AK Steel said that the price increase is in response to increased demand for carbon steel products, as well as the need to recover higher costs.

Steel Market Update will publish more detailed information about the AK Steel announcement, reaction from the steel buyers impacted and how the other mills might respond in Tuesday evenings newsletter. You can register for a 4-week free trial to our newsletter online at www.steelmarketupdate.com