AK's shares closed at $9.70, up $1.10, after trading as high as $10.05, in heavy volume. An analyst at JP Morgan added the company to the investment firm's focus list and raised his 2005 earnings estimate from $1.70 a share to $2.10.

Analyst Michael Gambardella said "unprecedented'' contract negotiations in Japan between automakers and steel makers would allow AK Steel to raise prices in expiring supply contracts and obtain increases in the midst of its existing contracts.

Automakers and other large steel users typically lock in long-term steel prices. About three out of every four tons sold by AK Steel is under a long-term contract, and all of AK's steel supply agreements are up for renewal in the next 15 months.

Last July, when CEO James Wainscott announced the company's first operating profit in almost three years, he said AK Steel needed to negotiate flexibility into its long-term sales agreements.

That was one of "three fixes" Wainscott said were essential to achieving sustainable profitability. The other issues were flexibility in raw-material costs and labor costs with unions.

Also Monday, citing improved cash flow and no debt payments due until 2007, Moody's Investor Services raised its opinion of AK Steel's liquidity.

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