Steel Mills
BlueScope Reports an Improved Forecast
Written by Sandy Williams
November 19, 2020
Australian steel producer BlueScope has revised its forecast for the first half of FY 2021 due to improved operations at all its segments and the sale of property in the U.S. Earnings before interest and taxes are expected to increase to AUD 475 million ($345 million U.S.) compared to the October forecast of AUD 340 million.
“All operating segments are performing well and momentum has continued to build as we approach the end of 1H FY2021,” said Managing Director and CEO Mark Vassella. “Residential alterations and additions activity, demand for detached new housing, and growth in demand for e-commerce warehouse and logistics facilities are all robust and U.S. automotive industry demand is recovering strongly.
Demand strength in the Australian market has driven domestic steel shipments and exceeded expectations, said Vassella. “Benchmark steel spreads in East Asia and the Midwest U.S. are currently above longer-term averages as the beginning of 2H FY2021 approaches. Nonetheless, there remains uncertainty around spreads and volumes given the risks of the evolving impact of COVID-19, which could disrupt demand, supply chains and operations, and broader macroeconomic activity.”
The company’s U.S. segment, North Star BlueScope, is shipping at full capacity due to automotive demand. “Since the end of 2H FY2020, realized steel spreads have bottomed and are improving, driven by a significant increase in benchmark Midwest hot rolled coil prices in recent months and more stable raw material costs. Given usual pricing lags in the sales mix, 1H FY2021 underlying EBIT is expected to be lower than 2H FY2020,” he said.
The EAF expansion project at North Star remains on schedule for commissioning in 2022. The company’s third EAF will have a melt capacity of approximately 850,000 metric tons and a second caster. Once completed, the Delta, Ohio, mill will have an annual capacity of 3.0 million metric tons.
Sandy Williams
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