Question-and-Answer Session
Operator
Thank you, Mr. Wainscott. We will now begin the question-and-answer portion of our conference call. (Operator instructions)
Our first question comes from Sal Tharani of Goldman Sachs.
Sal Tharani – Goldman Sachs
Good morning, Jim. Good morning, Al.
Albert Ferrara
Good morning, Sal.
James Wainscott
Good morning, Sal.
Sal Tharani – Goldman Sachs
Can you give us some big dawn between your contracts with this spark business in the first quarter? I’m sure contract has increased a share.
Albert Ferrara, Jr.
Until last year just for a reference point, we were about 50-50, and I would say that that changed slightly in the first quarter to roughly 60-40. We’re back to roughly 60% contract, 40% stock in light of what was going on in net market place.
Sal Tharani – Goldman Sachs
And on electrical steel, you did give us some color, but do you have any idea – I remember in the fourth quarter conference call you mentioned that volume could be done 10% – 15%. Do you have any number you can give us or what could have been done based on the cancellation you have seen?
Albert Ferrara, Jr.
We’re not really backing off that number much, we’re continuing to try and find a home for that product increasingly overseas. But I think that is under some pressure to be sure, particularly in the (inaudible) markets. I wouldn’t have a new percentage number for you, except just highlight that the challenges are a bit greater than we’ve previously anticipated.
Sal Tharani – Goldman Sachs
And obviously, the prices will be slightly lower also because you’re trying to find a new home?
Albert Ferrara, Jr.
That potential exists. Again, we’ll do what we can for our shareholders to hold.
Sal Tharani – Goldman Sachs
Okay. And lastly, are you – your furnaces at Ashland, I think there is no hot strip mill over there, is that correct?
James Wainscott
The hot strip mill in Ashland was shot down about a decade and a half ago.
Sal Tharani – Goldman Sachs
So you actually bring the slabs now to Middletown is that what you are doing? Or are there any other facilities?
James Wainscott
We bring them to Middletown.
Sal Tharani – Goldman Sachs
Okay. So how much freight is this costing you?
James Wainscott
It’s $10 and change, $10 to $12 kind of range and that’s not anything new. Again, I would emphasize that despite all the challenges that AK Steel has we’ve found a way to overcome them. Including the fact that we’ve got land lack facilities and we’ve got a lot of facilities and we do transport material to location as in this case, from Ashland to Middletown. In the long run, we think it’s a great strategy that served us well, but that there’s a bit of a cost penalty associated with that.
- To read the full transcript on Seeking Alpha, click here »
