<article><p class="lead">Australian steel producer Bluescope Steel has increased its forecast for underlying profit before interest and tax (pbit) in the first half of the 2020-21 fiscal year to 30 June, despite continued uncertainty about the impact of the Covid-19 pandemic.</p><p>Bluescope now expects pbit of around A$475mn ($347mn) from an <a href="https://direct.argusmedia.com/newsandanalysis/article/2152936">earlier A$340mn made last month</a> and up on the A$302mn for the same period of 2019-20.</p><p>Benchmark steel spreads in east Asia and the US midwest are currently above longer term averages as the start of the second half of the 2020-21 fiscal year approaches, the company said. But there remains uncertainty around spreads and volumes given the risks of the <a href="https://direct.argusmedia.com/newsandanalysis/article/2075862">evolving impact of Covid-19</a> that could disrupt demand, supply chains and operations, and broader macroeconomic activity, managing director Mark Vassella said.</p><p>Other than for scheduled maintenance just completed, its US unit North Star continues to despatch at full capacity with automotive volumes normalising across the half year, Bluescope said. Realised steel spreads have bottomed out since the end of the second half of 2019-20 and are increasing, driven by a significant increase in benchmark US midwest hot-rolled coil prices in recent months and more stable raw material costs. Given usual pricing lags in the sales mix, the first half of 2020-21 underlying pbit is expected to be lower than the second half of 2019-20, it said. </p><p>The outlook for southeast Asia in the 2020-21 first half is expected to see underlying earnings before interest and taxes to be at least double that of the second half of 2019-20. "We expect China to deliver a similar performance to the first half of 2019-20 on favourable seasonality," Vassella said.</p><p>BlueScope separately is working on technology that will produce low-emissions steel as part of the firm's support for the Paris climate agreement to keep the average rise in global temperatures below 2°C by 2050, Bluescope chairman John Bevan said at the company's annual meeting.</p><p class="bylines">By Kevin Morrison</p></article>
