US steel producer AK Steel expects to weather the projected 2021-2022 flat-rolled glut dubbed “Steelmageddon” by Bank of America Merrill Lynch in terms of volume. The market as a whole  however will likely suffer at least some pricing pressure, Kallanish learns from the company’s first-quarter conference call.

During the call, AK ceo Roger Newport fielded a call from Bank of America analyst Timna Tanners, who coined the Steelmageddon term in a research note along with fellow analyst Wilfredo Ortiz. Newport stressed that most of the new capacity coming online in 2021-2022 will not be specifically geared toward auto. AK, by contrast, is continually reaching for a larger slice of the high-margin, high-strength steel pie.

That said, sheet prices “... do tend to move together within a band,” he says. “That’s what the automotive business is. And so, when prices are way high up, those prices of auto go up slightly. When they’re down, those prices go down, as well. We would expect that to continue to hold true and be the case.”

Newport adds that AK has not yet discussed future sourcing with its auto customers, but it does not expect to lose market share. On the contrary, AK believes its ever-growing product line will spur market share growth.

“So, price will be discussed with every OEM at every opportunity. We expect that it fluctuates with the markets just as it always has. But, we also expect that they are going to pay for differentiated products like ultra high-strength steels that will allow them to get their light-weighting and still be able to keep their costs competitive,” Newport says. “So, we think we're in a great position from that standpoint... this new capacity doesn’t really change that narrative. To the effect it moves the spot market to a slight effect, then it has an even lesser effect on the auto space.”