BlueScope profits narrow in late 2022

BlueScope Steel Ltd. has reported second-half 2022 revenue down by 1 percent compared with one year prior, while its profits in the time frame declined by more than 60 percent.

The Australia-based firm, which operates a scrap-fed electric arc furnace (EAF) mill in Ohio, says its underlying earnings before interest and taxes (EBIT) of AU$851 million ($583 million) in the first half of 2022 shrank by 61 percent from AU$2.2 billion ($1.5 billion) earned from July to December 2021.

In its accompanying earnings report, BlueScope cites “softer steel spreads and lower volumes (particularly in the Australian Steel Products and New Zealand Pacific Island business units) combined with higher costs” as reasons for the narrower profit margin.

“Underlying EBIT for the half year was robust at AU$851 million in the context of softening macroeconomic conditions relative to those observed across fiscal year 2022,” BlueScope Managing Director and CEO Mark Vassella says. (The final six months of calendar 2022 represent the first half of fiscal year 2023 for BlueScope.)

The company’s North Star business unit, which operates the EAF mill in Ohio, suffered a 70 percent reduction in EBIT in the second half of 2022 compared with one year ago. The company nonetheless says, “Demand for North Star’s product remained good; the mill operated at full capacity, and approximately 60,000 tons [were] produced from the expansion project during its ongoing ramp-up.”

The steel producer describes that EAF capacity expansion in Ohio as “advancing well,” adding, “Expectations continue to be that the full ramp-up will progress over an 18-month period from August 2022.”

In its four-page February news release, BlueScope does not make reference to 2021 comments Vassella made that the company is considering adding a second EAF mill location in the eastern United States. Subsequently, North Carolina-based Nucor Corp. has announced it will invest $2.7 billion to build a 3 million-tons-per-year EAF mill in West Virginia.

The company’s next scrap-melting capacity addition could be in New Zealand. “The New Zealand business is considering the installation of scrap melting or EAF process to supplement or replace the existing steelmaking process at the Glenbrook plant,” the firm says.

BlueScope says the Glenbrook, New Zealand, complex currently “uses locally sourced iron sand and coal to manufacture about 650,000 metric tons of steel slab and billet a year at the [site]  south of Auckland.”

The company says its BlueScope Recycling business unit in the U.S. has “continued to gather momentum, through a number of low-capital capacity projects and the acquisition of the Mansfield, Ohio, site in August 2022”

Looking toward calendar year 2023, the company says, “Underlying EBIT in the second half of fiscal year 2023 [the first six months of calendar year 2023] is expected to be in the range of $480 million to $550 million. This is lower than [the prior six months] mainly due to softer Asian and U.S. Midwest steel spreads, and is subject to spread, foreign exchange and market conditions.”