BlueScope’s United States profit powerhouse revs faster

BlueScope on Wednesday told the ASX the outlook was buoyant.

“The stronger outlook is driven by improved earnings expectations for North Star and the North America coated business due to better than expected realized steel prices and spreads in the United States,” the company said.

But it signaled there had been some minor softness in its Australian steel products segment, with deliveries down because of flooding on the eastern seaboard, rail transport outages and disruptions connected to the COVID-19 pandemic. But the lower deliveries had been offset by stronger margins and better than expected contributions from its suite of value-added steel products. BlueScope operates Australia’s largest steel plant at Port Kembla in Wollongong.

Mr Vassella also said broader supply chain disruptions were continuing, and raw material prices were on the increase, meaning that BlueScope was operating with higher levels of working capital than usual.

BlueScope is a strong player in painted steel products for building and construction operations in Australia, with demand for its flagship Colorbond roofing product strong in a housing and renovations boom. Mr Vassella said the BlueScope workforce was working hard to minimize delivery delays and disruptions. The company lifted prices in Australia by between 6 to 8 per cent in February.

Coil Coatings was BlueScope’s second US acquisition in six months, after spending $US240 million in November for scrap steel recycling business MetalX, one of the big suppliers of feedstock for North Star.

A $1 billion-plus expansion of the North Star plant is in its last stages, and will be fully up and running by mid-year. High inflation in the US, which is running at 8.3 per cent on an annual basis, and an acceleration of the expansion project rollout meant the final cost came in about 10 per cent higher than original projections. BlueScope was emerged from BHP in 2002 to become a stand-alone steel company.

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