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Latest News - November 2014

November 11, 2014
AK Steel (AKS) Reaches New Labor Agreement with USW
Source: ZACKS
By: Zacks Equity Research

Steel maker AK Steel has announced the ratification of a new three-year labor agreement by the members of United Steelworkers of America (“USW”) Local 1915 with the company’s fully-owned subsidiary – AK Tube LLC. The new deal covers roughly 100 hourly production and maintenance employees at AK Steel's Walbridge, OH, tube plant.

The new agreement will be effective after the expiry of the current contract on Jan 22, 2015. It will serve the interests of both AK Steel and Local 1915 members in a highly competitive steel market.

Earlier, AK Steel reached a new 42-month labor agreement with the members of the International Association of Machinists and Aerospace Workers (“IAM”) Local 1943 in Jun 2014. The new deal covers roughly 1,700 hourly production and maintenance employees at the company's Middletown Works plant in Ohio.

AK Steel is well positioned to benefit from strength in the automotive market and higher shipment of steel products to automakers. It is expected to continue to gain automotive market share, driven by continued healthy demand for its carbon and specialty steel products.

AK Steel is also investing to procure about half of its iron ore and coal requirements internally. The company’s strategic investments are expected to improve its cost structure and strengthen its position in the years ahead.

Moreover, the recent acquisition of the Severstal Dearborn plant is expected to boost AK Steel’s future earnings and improve its credit profile and liquidity. The buyout has provided the company an access to highly modernized and upgraded steelmaking equipment and facilities.

However, AK Steel remains exposed to macroeconomic uncertainties. Oversupply in the steel industry and pricing pressure remain as overhangs. Moreover, a planned outage at the Ashland Works blast furnace in Kentucky is expected to weigh on the company’s results in fourth-quarter 2014.

AK Steel is a Zacks Rank #3 (Hold) stock.

Better-ranked companies in the steel space include United States Steel Corp. Nucor Corp and Steel Dynamics Inc. While United States Steel sports a Zacks Rank #1 (Strong Buy), both Nucor and Steel Dynamics hold a Zacks Rank #2 (Buy).



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