BlueScope Steel has changed tack and will now take on more debt to help finance its US expansion - that’s a move that will see the company no longer target cash retention and instead see a gearing up of its balance sheet.
BlueScope Steel’s forthcoming 2018-19 results have been given a small whacking by the combination of Donald Trump’s steel trade/tariff war causing global steel prices to soften and the rise in global iron ore prices.
The broker suggests reduced US steel tariffs for Canada could result in US steel spread pressure as imports potentially rise, impacting on already materially lower steel prices. US scrap prices may rise on likely increased supply from Turkey and reduced supply from Canada.
Six months ago management was of the opinion the industry structure was the best in 10 years. Since then, weak Chinese hot-rolled coil prices have meant the North Star spread has fallen around -35% to US$360/t and the broker notes incremental new supply is coming to the US.