Steel price surge not good for all

www.theage.com.au

Bluescope Steel’s interim profit is expected to surge more than 50 per cent, thanks to world steel prices above $US600 a tonne for hot rolled coil, but the good news will not be evenly spread across the steel sector.

While BlueScope and scrap merchant Sims Group, another important player in world ferrous metal markets, will report boom results this week, those of Australia’s other two steel makers, Smorgon and OneSteel, will be muted.

Both BlueScope and Sims are benefiting from rapid rises in world prices of their products – flat steel and scrap metal respectively – that are outstripping any increases in their input costs.

Unfortunately for Smorgon and, to a lesser extent, OneSteel, scrap metal and flat steel are both important inputs to their operations so, while BlueScope and Sims benefit, they tend to suffer as they struggle to pass on increased costs.

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