Expansion Plans at NSBS Face Challenges

BlueScope Steel expected U.S. steel spreads to improve instead of tightening and is now likely to miss its guidance mark for FY 2019 financial results. J.P. Morgan suggests the steel producer would benefit more from a share buyback than an investment in its U.S. facility.

Credit Suisse downgraded BlueScope to neutral following lifting of U.S. tariffs on Canada and Mexico. Credit Suisse analysts say a collapse in HRC pricing in the U.S. is inevitable and will force high-cost facilities to close. Analysts at UBS agree that a pullback in HRC prices will cause some capacity re-starts to be delayed or canceled.

North Star BlueScope has reportedly filed for an air permit with the Ohio EPA for the proposed expansion, tentatively moving the project forward. Plans include a third electric arc furnace and second slab caster at the Delta, Ohio, facility. The proposed project would be completed in two to three years and would increase annual production capacity by 900,000 to 1.0 million tons. A final decision on the project is expected by BlueScope in the second half of this year.