BlueScope lowers profit predictions due to global steel slowdown

It’s also down notably from posted EBIT of A$718.4 million in H1’24 and A$620.8 million in H2’24.

Mark Vassella, BlueScope’s managing director and CEO, said the downward revision in guidance reflects the challenging conditions the company and the broader global steel industry are facing.

“These challenges include the continued softness in East Asian spreads off the back of record levels of Chinese steel exports, ongoing cost inflation, and a period of pause and uncertainty in the US pending the outcome of the elections and timing of further rate cuts,” he noted.

North American operations

BlueScope expects its North American operations to deliver results that are less than half those recorded in H2’24.

The company said profit margins at NorthStar BlueScope have been lower than expected, and improvements in run-rate volumes have been unable to offset this. The segment’s H1’25 results will be “slightly below one-third of” H2’24 results, in which it posted underlying EBITDA of A$362.5 million on sales of just over A$2 billion with steel despatches of 1.37 million metric tons.

Additionally, the company revealed that customers of the Buildings and Coated Products North America division have been deferring orders due to election and interest rate uncertainty.

“Whilst an improvement in performance was expected in the half, the BlueScope Coated Products business has suffered a deterioration in its performance, particularly in its heavy-gauge business,” BlueScope stated.

The company said that BlueScope Coated Products continues to struggle. As such, it has tasked John Nowlan, chief technical and development officer, with turning the Coated Products business around.

Note that BlueScope established its Coated Products segment after its 2022 acquisition of metal painter Coil Coatings for $500 million.

Global operations

BlueScope’s Australian steel operations are being impacted by continued softness in East Asian steel prices and global coke prices.

Soft demand and pricing are also plaguing the company’s business in New Zealand, it said.

Additionally, BlueScope noted that softness in China’s economy is hurting its Coated Products Asia segment.

Because of this environment of prolonged weakness in spreads and with rising costs, “BlueScope is targeting a further improvement in annualized earnings through the identification and delivery of approximately A$200 million of cost and productivity initiatives across the group,” it said.

The company will provide further progress updates when it releases its full half-year results on Feb. 17, 2025. That will include updates on NorthStar’s capacity expansion and plans for a Midwest greenfield cold rolling and coating facility.