Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Australian steelmaker BlueScope expects its order and shipment rates in major markets to remain strong in H2 FY2021 (ending June 30, 2021) and is progressing on its North Star mini-mill expansion as planned.


The company, which released its earnings for H1 FY2021 (ending December 31, 2020) on Monday, noted that the North American spot steel spreads are considerably higher in H2 compared to historic averages as well as levels during H1 FY2021. However, uncertainty remains over these conditions persisting through the second half of the fiscal due to unpredictable market, macroeconomic indicators, and the effects of the COVID-19 pandemic. 


The company has forecasted its H2 underlying EBIT at $750-830mn, with variation based on market conditions, foreign trade, and additional pandemic impacts.


The steel producer’s North Star mini-mill electric arc furnace expansion in Delta, Ohio is expected to raise hot-rolled coil production by about 850,000mt per year with an increased installed melt capacity of 1.4mn mt. Over the past six months, work has begun on the melt shop, caster, and furnace installation with completion targeted for H2 FY2021. New plant commissioning is slated for FY2022 with ramp-up to full production projected 18 months later.


The company’s 3mn mt per year flat steel operations at Port Kembla steelworks are set to reach the end of operations for its No. 5 blast furnace (5BF) between 2026-2030. A blast furnace reline project for its 6BF, currently suspended, or its 5BF is under review. 


BlueScope’s total steel order shipments fell by 4.95pc to 7.08mn mt in FY 2020 from 7.45mn mt in FY2019. However, they increased by 5.3pc to 3.81mn mt In July-December 2020 from 3.62mn mt in the same prior-fiscal period and rose by 9.8pc from 3.47mn mt in January-June 2020.


The steelmaker’s sales fell 1pc to A$5.82bn ($4.61bn) in H1 FY2021 compared to A$5.86bn in the same prior-fiscal period due to lowered selling prices driven by global steel price declines and negative impacts from a stronger Australian to US dollar exchange rate.


The company reported a profit of A$330.3mn in H1 FY2021 up 78pc from A$185.6mn one year prior, attributed to strength in the housing market. 


Underlying earnings before tax and interest (EBIT) rose 75pc to A$530.6mn in the first half of the fiscal from A$302.4mn in H1 FY2020 due to stronger steel spreads resulting from decreased raw material cost, and higher volumes from increased demand.


($1 = AUD1.26)

Leave a Reply

Your email address will not be published.