Blue Scope Record Record Profits !

Australian steel makers look to have a bright future with booming US steel prices and strong local demand lifting BlueScope to record June-half profits.

BlueScope is on track to deliver its best full-year earnings since it split from BHP in 2002.

AWU National Secretary Dan Walton says the result is great news for Australian jobs and the nation as a whole.

Preliminary unaudited earnings before interest and tax reached $1.19 billion in the six months to June 30, up from a forecast $1 billion to $1.08 billion announced in April. Full-year underlying EBIT would be a record $1.72 billion.

“Along the entire supply chain, Australian steel creates $29 billion of economic benefits and employs more than 100,000 people,” Mr Walton says.

“BIS Shrapnel has estimated that for every $1 spent on buying domestic steel, $2.30 in sales is generated by domestic industries – that means jobs in manufacturing, iron ore and other mining, professional services, transport and utilities.

“And every $1 million in increased or retained business output in steel produces six direct and 10 indirect jobs, around $1.8 million in gross value added, and significant benefits for government balance sheets in avoided welfare expenditure and through additional tax revenue.”

Steel prices in the US, where BlueScope’s North Star steel mill in Ohio is running at full capacity, are almost four times as high as they were in the depths of the pandemic last year. The plant is a big supplier to the US car and whitegoods industries.

In Australia, the nation’s travel lockdown has actually helped the company, with BlueScope saying strong demand in the construction industry means profits from the local operations were about 60 per cent higher than in the December half.

Sales volumes from the group’s Port Kembla, NSW, steel mill were the highest since 2008, partly driven by its ColorBond sheet metal range, which is in big demand as people build new houses away from cities, or renovate their metropolitan properties with funds they may have normally spent on overseas travel.

Other BlueScope businesses including Lysaght, Fielders and Orrcon also stand to gain as construction drives demand for steel house framing, cladding, fencing and other construction products.

Mr Walton says the AWU has been working constructively with BlueScope during enterprise bargaining recently concluded at its Western Port steelworks in Hastings, Victoria, and for Port Kembla (where negotiations will commence early next year)

“I’m sure our members are looking forward to sharing in gains their hard work has resulted in.”

He says the boom in local demand should also bring a mooted upgrade to the Port Kembla steelworks closer to reality.

In February the company said the most likely option was an $800 million reline of the No.6 blast furnace, mothballed in 2011 and now sitting idle.

Mr Walton says BlueScope now has no reason to delay the work, which would create hundreds of jobs.  And it should look to new technologies to drive change.

“The world is rapidly moving towards a low carbon future,” he says.

“The Port Kembla upgrade would provide BlueScope with a great an opportunity to plan for ‘green’ steelmaking technology, which would be a vital step to ensuring the future of the Australian steel industry.”

For its part the AWU is also making a submission to a federal inquiry into government procurement practices, in a bid to see government purchases put Australian products – including steel, as well as glass, cement, aluminium – ahead of cheap and often shoddy imports.

“Australia has seen countless times what happens in Port Kembla and Whyalla when our steelworks are under pressure,” Mr Walton says.

“Australia’s steel industry underpins national security and is the vital cog in the broader industrial wheel – for this reason it must be supported.”