BSL - the Steel Factor that turns BLUE
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     holycow
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Username: holycow
Post Number: 2324
Registered: 08-2004
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Votes: 0
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| | Thursday, June 29, 2006 - 06:25 pm: |  
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Thursday June 29, 2:53 PM
UPDATE 4-Australia's BlueScope hit by commodity prices
(Adds govt comment in paragraph 18, details, share update)
By Daniel Morrissey
SYDNEY, June 29 (Reuters) - Australia's biggest steel maker, BlueScope Steel Ltd. (ASX: BSL.ax) , cut its 2006 earnings forecast and said it will axe jobs and shut two plants due to soaring raw materials prices, sending its shares down 5 percent.
In its second profit warning this year, BlueScope said 2006 earnings per share would be at the bottom end of its 65-75 cent forecast range, which would be 5.9 percent below the average of analysts' forecasts, according to Reuters Estimates.
BlueScope blamed significantly higher zinc prices, lower tinplate volumes and prices, and reduced earnings from its Asian operations for its earnings downgrade.
The company plans to close its loss-making tin mill in Port Kembla, south of Sydney, after a 19 percent rise in iron ore prices effective July 1, and its Taiwan manufacturing plant, cutting about 590 staff and management jobs across the group -- around 3 percent of the workforce.
The one-off restructuring costs would be A$150-A$200 million ($110-$146 million) before tax, said BlueScope, which also has operations in the United States.
Chief Executive Kirby Adams said the company was making tough decisions in volatile times and was responding swiftly to higher iron ore prices and a slump in demand for Australian tinplate.
"The announcements today are the flip side of Australia's exciting resources boom, where the negative effect of higher raw material prices really hits home," he said in a statement on Thursday.
Two days earlier, OneSteel Ltd. (ASX: OST.ax) , Australia's second-biggest steel maker, agreed to buy smaller rival Smorgon Steel Group Ltd. (ASX: SSX.ax) for about A$1.6 billion ($1.2 billion), in the latest sign of industry consolidation.
France's Arcelor CELR.PA has also bowed to an improved bid from Mittal Steel ISPA.AS to create the world's biggest steel maker, three times larger than its nearest rival.
Ausbil Dexia fund manager Paul Xiradis said the big takeovers in Europe were about getting critical size to help lower costs.
"BlueScope might be trying to stave off any overtures, but then again they might be fashioning it so that they are more presentable to a suitor," said Stuart Smith, a senior client adviser at brokerage Bell Potter Securities.
Shares in BlueScope were down 3.2 percent at A$8.06 by 0442 GMT in a broader market 0.8 percent higher. Still, the stock has performed better than the benchmark S&P/ASX 200 Index .AXJO by about 10.6 percentage points so far this calendar year.
BlueScope posted a 38 percent fall in first-half profit in February on higher iron ore and coal costs, while a plant fire forced it to put more basic steel product into export markets under pressure from increased supply from China.
The company is investing heavily in new plants that will supply further processed products, such as painted steel coated with zinc and aluminium for corrosion resistance, as it aims to cut its exposure to the volatile commodity end of the market.
The Port Kembla plant is Australia's only tin mill.
"We can no longer carry loss-making businesses," Adams said.
The government said it would provide an assistance package for BlueScope's Port Kembla workers who lose their jobs. ($1=A$1.37)
http://au.biz.yahoo.com/060629/19/p/s3js.html
... some navel gazing...
1) there seem to be a shake up/out in the steel sector, merger and acquisition has now becoming "critical" for steel companies to grow in size quickly as a means to reduce cost. The unspoken words here - hey man, cost in steel making is going up. Who said there's no commodity price induced inflation? Other than that, there's other inflationary pressure coming from the energy side.
Qustion(s): what's the future for steel industry? In Australia? Can they stand up against cheap imports? Will the company be profitable under such "cheap invasion"?
2) M&A activities is a fundamental signal for market top/bottom. In my view, at the bottom it's the (lack of) demand that drives market consolidation while at the market top, its the supply (cost) side that drives the market into rationalisation. So... the very unpopular question here is - are we seeing a market top here? Or are we seeing a sector top here?
3) Assuming the steel industry is facing some fundamental issues such as high raw material costs, what does it mean after all these M&A rationalisation? Is this the prelude of a shake out in the mining sector? There are way too many small mickey mouse mines springing up like rabbit holes all over the landscape. Will these rabbit warrens be bought up by the Chinese?
Everywhere you turn, someone is digging up some dirts and want to sell it to the public. Is this sustainable?
???
HC
"... if you've got a chart, I have an opinion!"
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holycow
Member
Username: holycow
Post Number: 2338
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Sunday, July 02, 2006 - 03:57 pm: |
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Sunday July 2, 10:33 AM
BlueScope looks to Chinese market
Australian steel maker BlueScope Steel is shifting its focus to China's burgeoning construction market in the face of rising iron ore prices.
The hike in ore prices last week forced BlueScope to lay off 600 workers, including 250 at its Port Kembla tin mill in New South Wales.
The company's chief executive, Kirby Adams, says the company is adding value to its steel by moving into building materials.
He has told Channel Nine that the company needs to increase its share of the Chinese market.
"China is now the biggest construction market in the world. It's a natural market in which we should participate," he said.
"China now represents one-third of the world's steel production and one-third of the world's steel consumption.
"If we're going to be a global player of any note, we have to be in China."...
... Frankly I am not impressed by this CEO if this is his "vision" - it comes too late and is in hindsight where by now the Chinese construction is in the cusp of cooling down due to capital restriction by the Chinese govt. This move by BSL comes across as a reactionary move to show the investors this CEO and his team is doing something to arrest the profit decline. This is hindsight vision as far as I am concerned.
Why hasn't BSL been in China years ago? This should be the question he ask of himself! Now? It's too late, man!
ttp://au.biz.yahoo.com//060702/31/s8u8.html
HC
"... if you've got a chart, I have an opinion!"
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dfhill
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Username: dfhill
Post Number: 29
Registered: 01-2005Rating: N/A
Votes: 0
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| | Thursday, July 06, 2006 - 09:09 am: |
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The Tin Mill 2000 project was completed in about 2000. It included an upgrade of the entire coil/tin plating line including an upgrade of one tin plating plant and the installation of a new one.
A multimillion investment reduced to zero in 6 years. Great vision.
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holycow
Member
Username: holycow
Post Number: 2418
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Saturday, July 15, 2006 - 10:12 am: |
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... how do we know things are not going all that well? Here's a tip - listen to the man who's in the know and who's all stressed up! Yes, listen to the man of steel... and he ain't no Clark Kent!
... he is... our good old Aussie bloke Kirby Adams. And he's stressed and pissed and all fired up! This is what he said... ..."OK. I do want to protect Australian shareholders, Australian jobs and future jobs, and Australian exports,"
... does he really care so much for the Aussie shareholders, jobs, future jobs and exports? Dunno! May be yes, may be no... but I do know one thing - when Pauline Hanson came on to the political scene, she had never failed to remind all Aussies that "she represents the middle Australians, or middle Australia?". John Howard would never fail to claim that he is always fighting for the "little battlers", whilst the union will never fail to remind everyone that they want to maintain everybody's way of life... and blah blah blah.
Politicians all talk like that. Craps!
So, why is Kirby talking like a politician? Is he mad? Crazy? or naive? No one wants to talk like politician unless they know they are talking crap. Is Kirby talking crap? Is he a politician?
No, I think he is just someone who is trying very hard to save his business,... and his job.
He wants protection. He wants tariff. But he won't say that to JH, like... "hey I want tariff imposed on the cheap Chinese steel, I want you to save my job...". He is smarter than that, he said something else... like share holders, job, exports, etc.
Can see or not? Or am I being too cynical?
... and btw, I didn't hear he protest against cheap Plasma TV, cheap Chinese clotheswear, cheap imports (that provides cushion to inflation), etc... how come?
Is he blind? How long had we been having cheap Chinese imports? Years... after so many manufacturing entities moving off shore with thousands of job losses... now he protests. Why now? Why now only he is protesting?
Is there anything to do with his realisation that good time for steel is over? Can he blame others for BSL's demise? Can he blame others for his own problem? He should have protested years ago when the going was good for BSL... but he didn't.
When the going was good he took it easy. Relax! Now... I think he's a bit too late. How good you reckon he is as a CEO for BSL?
I reckon he lacks vision and foresight... and he makes a lousy politician. Even I can see "through" him.
...In a stinging attack on the lack of action to support manufacturing, BlueScope Steel chief executive Kirby Adams yesterday said the Government was caught up in a trade fantasy.
And he warned strongly against entering a free trade agreement with China unless imbalances in the current trading relationship were corrected.
"(Australia is) caught up in ideology … in the fantasy that we can lead the world to a free-trade nirvana by unilaterally dropping our tariffs," Mr Adams told an American Chamber of Commerce lunch in Melbourne.
He said Australia had already tried slashing its tariffs on agriculture in a bid to lead by example and it didn't work.
"Australia unilaterally liberalised its agricultural tariffs, but now it faces a stalled Doha trade round — stalled by the refusal of the Europeans and the Americans to do likewise," Mr Adams said. "And we were inundated by EU-subsidised Belgian peas.
"We have been naive. We have nothing to bargain with when we are negotiating trade deals."
Mr Adams said the recent shrinking of the Australian manufacturing sector meant that Australia could not afford to adopt the same ideological approach with a China free trade agreement.
Current tariff imbalances should be eliminated now, he said. The Chinese steel industry was 50 times bigger than the Australian steel industry, yet there were no tariffs in Australia and an 8 per cent tariff on steel going into China.
"It is hard to argue that China is a developing country in relation to its steel industry when it is … the world's largest by four times," Mr Adams said.
He called for tariff equalisation. "Clearly, an FTA that is designed to promote freer trade must ensure the current imbalance in steel tariffs is addressed immediately," he said. "Lower theirs, or raise ours, now."
Mr Adams tried to head off the predictable name-calling by his critics, accepting that he would be labelled a protectionist.
"OK. I do want to protect Australian shareholders, Australian jobs and future jobs, and Australian exports," he said.
"Isn't that why we employ our governments? To protect us?"
http://www.theage.com.au/news/business/
man-of-steel-urges-government-to-act-to-save-manufacturers
/2006/07/14/1152637870209.html
HC
"... if you've got a chart, I have an opinion!"
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holycow
Member
Username: holycow
Post Number: 2554
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Tuesday, August 01, 2006 - 10:52 am: |
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... the brokers and the industrial insiders are saying so many words to get across a point - they don't know or they are not sure or its too early to tell or their bums are itchy and they have no idea why or the reason why chicken crosses the road or why cow farts...
You see, they may know or may not know, the fact remains, they are not gonna tell you first! You will be the last one to know if they ever know anything at all.
But here's something they are quite willing to tell you - the trend of increasing supplies is quite certain. So they can go around scratching their arse and not telling you why, you don't need to know what is happening immediately... this is all you need to know - over time, the supply of steel will increase. The consequences... well you can guess.
If you are heavily into steel stocks, take action now. Don't wait! Reduce your holdings or get out! Let them tell each other what not and do their arse scratching and diddling, while your money is safely back into your pockets!
... and then you don't have to give a damn to their what not when they finally figure out what it's all about...
Got it?
~~~~~~~~~~~~~~~~~~~~~
Further Volatility Appears Sole Certainty In Steel Markets
FN Arena News - July 31 2006
By Chris Shaw
Markets generally overreact to both good and bad news and the steel market is no exception, Credit Suisse pointing out whether steel price fluctuations are blips or corrections, steel equity prices will generally overprice the move.
This, according to the broker, makes it difficult to know whether the current trend in the market of lower spot prices in China, which is flowing through into the other Asian markets, is an early sign of a correction or simply a reflection of more volatile markets given thin trading during the European summer.
One trend the broker suggests is clear is production is growing faster than demand, but for once the finger of blame cannot be pointed directly at China as it notes the US, Russia and Turkey all lifted steel production during the first six months of the year.
Also supporting the view China for once is not fully responsible is the China Iron & Steel Association (CISA), which says Chinese steel capacity is actually being overstated by analysts. It is forecasting real output for the year of about 410m tonnes, with domestic demand likely to reach about 400m tonnes...
...
Factoring all this in, Credit Suisse notes the simple conclusion is it is too early to know for sure whether prices are correcting or simply reflecting the usual volatility of the European summer. The one thing the broker appears sure of is market participants should be set for further price volatility in the short-term.
http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=C2DBF534-17A4-1130-F5649D5 969417ECB
HC
"... if you've got a chart, I have an opinion!"
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