BlueScope to expand US EAF operations

Australia-based steel producer Bluescope Steel plans to expand its 2.1mn t/yr North American hot-rolled products business North Star by 600,000-900,000 t/yr to capitalise on firm demand.

The firm will make a final decision on the expansion to the Ohio business later this 2018-19 fiscal year ending 30 June and will update the market on the project in February. It forecasts to spend $500mn-$700mn on a third electric arc furnace (EAF) and second slab caster, which will take between two and three years to deliver.

BlueScope also sees potential to further debottleneck North Star, taking capacity beyond 3mn t/yr as it looks at opportunities to expand its hot strip mill to meet the new capacity afforded by the third EAF and second caster.

BlueScope forecasts a continued strong performance from its North Star business, underpinned by its expectation of a $90/t increase in the average benchmark steel production spread in July-December from an average of $434/t in January-June. This is based on continued increases in hot-rolled coil (HRC) prices, slightly offset by higher raw material costs. The firm expects an increase in consumable costs of around $10mn in the half due to higher electrode, refractory and alloy costs.

North Star Bluescope, as the North America unit is known, shipped 2.11mn metric tonnes of HRC during 2017-18, a slight increase on 2.09mn t in 2016-17.

The company reported 2017-18 pro-forma performance sales revenues of $1.49bn from North Star, a 16pc increase from a year earlier. Its earnings before interest and tax was in line with the previous year at $331.7mn, reflecting the higher costs experienced in the year.

Blue Scope acquired the remaining 50pc of its now fully owned subsidiary North Star on 30 October 2016 for approximately $739.5mn.