Australian steelmaker BlueScope raised its profit forecast for July to December by as much as A$240 million, to close to A$1.1 billion. Higher US steel prices and cheaper iron ore have widened the gap between its raw material costs and what it earns from steel.
At a glance
- BlueScope now expects a US steel spread of $810 a tonne, up from the $750 it assumed before.
- Earnings from its US business are set to rise 50% from the first half of the year, to A$881 million.
- US hot-rolled coil prices are up 55% from a year ago, while iron ore is 15.8% cheaper, Argus data show.
Background
BlueScope is an Australian steelmaker with a large mini-mill business in the United States. A steel spread is the difference between the price a mill gets for its steel and the cost of its main raw materials, so it works like a profit margin per tonne. EBIT means earnings before interest and tax.
What happened
BlueScope raised its underlying EBIT guidance for July to December to "approaching" A$1.1 billion, from A$860 million to A$960 million before, Argus reported on October 26. The upgrade is worth up to A$240 million.
The company now expects its US mini-mill spread to be $810 a tonne, up from the $750 its earlier forecast assumed. It credited mainly the North American market, along with a stronger performance from its Australian steel products business.
Why margins widened
Steel prices rose while some raw material costs fell. Argus-assessed US domestic hot-rolled coil prices rose 55% from a year earlier to $1,298.75 a short ton on October 20, while seaborne iron ore fell 15.8% to $89.2 a dry tonne.
Coking coal moved the other way, rising 38% to $227 a tonne. BlueScope expects earnings from its US business to rise 50% from the first half of 2026, to A$881 million from A$587 million.
What it means
Strong US steel prices are lifting producers with American mills, while cheaper iron ore helps them further. BlueScope rejected an A$15 billion takeover proposal from Steel Dynamics and Australian group SGH in February but has said it remains open to a higher bid.
Our read
Outlook: neutral. Higher steelmaker profits reflect strong US steel prices rather than any change in iron ore demand.
What to watch
- BlueScope's half-year results, due after December.
- US hot-rolled coil prices, which drive its biggest business.
- Any renewed takeover approach for BlueScope.
For information only, not investment advice.
Iron price in India
metalscost.com India reference price as of 2026-11-01.
Detailed analysis
Timeline
- 2026-10-26: BlueScope raises its July-December earnings guidance to nearly A$1.1 billion.
Demand Drivers
BlueScope said the North American end-use market drove most of the upgrade, with US hot-rolled coil prices up 55% from a year ago.
Supply Drivers
Iron ore is 15.8% cheaper than a year ago, lowering raw material costs for steelmakers.
What could lift prices
- High steel margins encourage mills to keep running, supporting iron ore demand.
- Strong US steel prices point to healthy demand in North America.
What could weigh on prices
- Seaborne iron ore is 15.8% cheaper than a year ago.
- Hard coking coal from Australia is 38% dearer than a year ago, raising costs for blast-furnace mills.
Country impact
| Country | Impact | Reason |
|---|---|---|
| Australia | Low | An Australian steelmaker expects much higher earnings, mainly from the US. |
| United States | Medium | High domestic steel prices are driving BlueScope's profit upgrade. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Steel | Positive | Wider steel spreads are lifting steelmakers' profits. |
Who gains, who loses
- BlueScope shareholders: Expected earnings rose by up to A$240 million.
- US steel buyers: They pay 55% more for hot-rolled coil than a year ago.
Other ways this could play out
- If US steel prices hold, BlueScope could beat the upgraded guidance.
- If US prices fall back, its spread could narrow from $810 a tonne.
Price risks
- Iron ore prices depend mainly on Chinese steel production.
- Rising coking coal costs could squeeze steel margins.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
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United States