BlueScope posts record profit on hot steel

BlueScope Steel has posted a record profit and tips a "supportive long-term outlook" for steel.

The steelmaker on Monday reported a $2.81 billion net profit after tax (NPAT) in the year to June, up 135 per cent or $1.62 billion on the year before, on strong demand and higher prices for steel.

Underlying earnings before interest and taxes (EBIT) for the year was a record $3.79 billion.

Speaking at an investor briefing, managing director and CEO Mark Vassella backed the United States as a key source of growth, as a net importer of steel and "a great place to make and sell flat steel products".

He said the US steel industry's consolidation and China's move to reduce exports and limit over-production were "structural positives" for BlueScope.

At full capacity, BlueScope's North Star works in Ohio will represent five per cent of total annual US flat-steel production with a $1 billion expansion almost complete.

He also announced North Star has entered into a multi-year supply contract with US manufacturer Cliffs for their ground-breaking Toledo plant, which makes low-carbon iron feedstock used in blast furnaces.

In a boost for investors, the share buy-back program will be expanded to allow a further $500 million to be bought over the next 12 months, which generally supports the share price.

Shares in BlueScope rallied 5.2 per cent, or 88 cents, to $17.77 by 1.10pm on Monday.

Global trends pointed to a "long-term supportive outlook for steel", Mr Vassella said.

These include a push for lower-emission steel and the rise of the digital economy, with steel needed for equipment the warehouses, distribution centres and data centres to support e-commerce.