One-third of Bluescope Steel’s underlying earnings, about $549 million a year, come from the US where President Donald Trump says he will impose a 25% tariff on foreign steel.
Bluescope hasn’t commented yet on the announcement, nor explained the impact of the tariffs, but the company, with the backing of the federal government, had been pushing the US for special treatment.
The company had argued that its steel was transformed into local products by its 3000 America employees.
Bluescope last week said: “A comprehensive sourcing strategy has been developed to help manage potential adverse impacts (of tariffs).”
This chart shows Bluescope’s earnings by geography:
Bluescope shares have been surging since the election of Trump as president, his promise to reinvigorate the US economy, and stronger steel prices. Yesterday they closed at $16.17, up from a 12-month low of $10.60. In early trade today they were at $16.605, up 2.6%.
BlueScope is the largest global producer of coated and painted steel building products, including Colorbond steel and the zinc/aluminium alloy-coated Zincalume steel.
In the US, the company also makes hot-rolled coil steel at its mill in Ohio through North Star Bluescope Steel. It sells 90% of its production in the Midwest of the US to a mix of industries: 50% automotive, 35% construction, 5% agricultural and 10% manufacturing/industrial.
North Star has been benefiting from strength in the automotive sector as well as continued recovery in US construction.
Bluescope this week announced a 23% lift to $441.2 million in net profit after tax for the first half of 2018. Sales revenue was up 7% to $5.47 billion.
The steel maker’s business has been improving since October 2015 when it announced what it called a game-changer agreement with its employees to cut 500 jobs and freeze wages for three years.
The agreement was a significant part of the company’s $200 million cost cutting target and kept the Port Kembla steelworks south of Sydney from shutting.