AK Steel announced Wednesday that for the third quarter of 2014, the company expects shipments of approximately 1,350,000 tons, a decrease of approximately 3 percent from the 1,398,000 tons shipped in the second quarter of 2014. Shipments for the third quarter reflect the effects of reduced production at the company’s Ashland Works blast furnace due to a recent unplanned maintenance outage and subsequent production shortfall, partly offset by continued strong demand from the automotive market.
The company expects its average selling price for the third quarter of 2014 will be approximately $1,100 per ton, similar to the second quarter average selling price of $1,095 per ton. The small anticipated increase in the company’s overall average selling price is primarily due to a lower percentage of product shipments to the carbon spot market in the third quarter compared to the second quarter.
For the third quarter, the company estimates that the unplanned outage and the subsequent lower than normal production levels will negatively affect its financial results by approximately $25 million. This impact is reflected in the company’s third quarter guidance. For the fourth quarter, the company estimates that its financial results will be negatively impacted by approximately $13 million for reduced production from the blast furnace prior to the planned outage in October and by $29 million related to repair costs and the loss of production during the planned outage. The company will purchase merchant carbon slabs and increase production of carbon slabs at its Butler Works electric arc furnace to offset a portion of the reduced production at Ashland Works.
In addition, to the extent the company’s acquisition of Severstal Dearborn is completed in advance of this planned outage, the company will utilize the operational flexibility afforded by the addition of the Dearborn blast furnace to help meet the needs of its customers. Notwithstanding the negative impact from the Ashland Works blast furnace issues, the company currently anticipates an improvement in its financial performance in the fourth quarter compared to the third quarter.
The company believes that the reline of the blast furnace hearth will position it well to provide stable blast furnace operations in the future by allowing the company to avoid the unplanned disruptions that have occurred in 2014. In addition, the company expects this investment to reduce the company’s future production costs by returning the Ashland Works blast furnace to normal operating levels and allow the company to better serve its customers in the future.
