Bluescope anticipates a dark year

Bluescope anticipates a dark year

Australian steelmaker BlueScope Steel drew a gloomy picture for its fiscal year 2006 (ends June 30, 2006) outlook. The company indicated that excessive inventory in most global markets, especially China, plus the fire at the Western Port Hot Strip Mill led the company to achieve lower sales volumes in the first four months of the fiscal year. The company expects a very low sales margin in the first half of this fiscal year because of higher raw material costs; weakness in the Australian automotive, distribution and manufacturing segments, which caused companies to export slab instead of using domestic hot rolled coil and value added products; and higher conversion costs at Western Port as a result of the fire. Bluescope anticipates that the excessive steel inventory situation will continue through the end of December 2005 in most markets. The company said that the Western Port Hot Strip Mill would be back on line before the end of this month. Company shares plummeted around 19 percent after the announcement.