“It’s driven margins that are at 20-year lows,” Mr Vassella said.
He said China had exported 93 million tonnes of steel in calendar 2023. To put that in context, BlueScope’s plant at Port Kembla in NSW makes about 3 million tonnes of steel annually.
While there are other elements to the US expansion, the centrepiece is a proposed new plant, likely be built near the company’s North Star steel mill in Ohio.
“We’re really talking about taking Colorbond to America,” Mr Vassella said.
He said a decision would be made in July-December about the expansion plans. He emphasised it would be done in a “modular” way – where capacity could be progressively added. If the plan were fully executed it would cost around $US1.2 billion and would run until 2030.
Underlying earnings before interest and tax slipped 16 per cent to $718 million in the six months ended December 31 as revenue dropped 8 per cent to $8.54 billion.
BlueScope is forecasting EBIT of between $620 million to $690 million in the June half.
Mr Vassella said there was a slight contraction in demand for the first half in the Australian steel business, but sales of Colorbond steel still enjoyed “historically robust levels”. The Australian operations suffered a 14.5 per cent decline in EBIT to $258 million.
At the North American unit, EBIT slipped 16.4 per cent to $417 million. BlueScope has just completed a $1 billion-plus expansion of its North Star mill in Ohio, which makes steel for the automotive, whitegoods and agricultural sector.
The Asian operations had a 16.4 per cent drop in EBIT to $96 million.
Barrenjoey analyst Megan Kirby-Lewis, who has a 12-month price target of $25 on the stock, said the North American operations had performed better than expected, while in Australia the “increasing shift to value-added products is supporting higher EBIT than previous low points in the cycle”.
BlueScope’s shares traded 3.3 per cent lower at $22.10 at 11.45am AEDT. The stock traded at $17.75 in mid-October and at $25 in August 2021.
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