Australian steelmaker BlueScope Steel has announced that it has updated its guidance for the first half ended December 31 of the financial year 2020-21 and expects its underlying EBIT to be around A$475 million for the given half, increasing by 80 percent compared to the second half of financial year 2019-20, due to better demand and despite the uncertainties caused by the coronavirus.
The company stated that demand from the construction and manufacturing sectors in Australia has recovered faster than expected, especially demand for coated and painted products has been strong. The company now expects that Australian construction and manufacturing activity will remain strong, driving elevated domestic steel dispatches for the balance of the first half of the financial year 2020-21.
According to the company, benchmark steel spreads in East Asia and the Midwest US are currently above longer-term averages as the beginning of the second half of the financial year 2020-21 approaches. Nonetheless, there remains uncertainty around spreads and volumes given the risks of the evolving impact of the coronavirus, which could disrupt demand, supply chains and operations, and broader macroeconomic activity.
Other than for the major scheduled maintenance outage just completed, the company’s US-based unit North Star continues to dispatch at full capacity with automotive volumes normalizing across the half. Since the end of second half of the financial year 2019-20, realized steel spreads have bottomed and are improving driven by a significant increase in benchmark Midwest HRC prices in recent months and more stable raw material costs.
The company’s New Zealand and Pacific Islands unit performance is improving substantially, primarily due to a return to normal operations post-coronavirus and very strong domestic demand. Steps to implement the business restructuring continue, including the shutdown of the loss-making pipe mill.