Why Is The Market Looking At BlueScope Steel Limited?

BlueScope Steel Limited

Steel prices are marking a steady increase amid betterment in global economic conditions. China’s domestic steel market is surging, and both the steel rebar and Hot-rolled steel are on a surge. As per an outlook from world steel association, average world steel use per capita increased over the long run from 2001 to 2017 by 64.5Kg. The average steel consumption per capita was at 150kg in 2001, which increased by 64.5kg to average around 214.5kg in 2017.

As per the world steel association, the steel demand is likely to be 1.5 times higher than the current level of demand by 2050. As the major economies are building and developing economies are emerging, their steel consumption would likely to increase with every improvement in the economy.

As steel prices are likely to increase over the long-term, investors may want to take advantage of it; however, doing so is not easy, as investing in steel requires a significant level of capital and industrial information. However, putting capital in steel manufacturing companies is also a way to take advantage of high steel prices. For the same reason, the investors are eying on the Australian steel producers such as BlueScope Steel Limited (ASX: BSL) on the Australian Stock Exchange.

BlueScope Steel Limited, an Australian steel product company, operates and expands its portfolio to the North-America, Australia, and Asia through different projects.

The company operates North Star mini-mill in Delta, Ohio in North-America and rolls out high-quality hot-rolled coil steel (HRC steel) for various industries such as automotive, construction and manufacturing. The company also provides Engineered Building Solutions (EBS) through Building North America to the industrial and commercial industry with brands and trademarks such as BUTLER® and VARCO PRUDEN®.

BlueScope Limited operates in Australia through Australian Steel Products, which focuses on competitive steelmaking and higher value and provides branded steel products for the industrial usage under the brand such as COLORBONG® steel, ZINCALUME® steel, and LYSAGHT®.

The company has various such other projects and trademarks, which provided an impetus to the company to mark a global presence apart from Australia.

Share buy-back program:

The company announced an On-market buy-back program on 3rd December 2018 for the ordinary shares and provided capital management as a reason for the announced buy-back.  The company appointed Credit Suisse Equities (Australia) Limited as a broker for the proposed buy-back and decided to buy back A$250 million worth of ordinary shares form the market and kept the deadline till 30th June 2019.

As per Appendix 3E, updated by the company on 27th March 2019. The company bought back 7,054,561 shares with a total consideration of A$89,604,781.98, excluding the shares bought back on 27th March 2019.

BlueScope Limited bought back 250,000 shares on 27th March 2019 with a total consideration of A$3,364,275.00.

The highest price paid by the company for the proposed buy-back on 27th March was A$13.580 and the lowest price paid on the same day for the proposed buy-back was A$13.360.

The stock of the company managed to close at A$19.950 (as on 29th March 2019), up by 0.216% as compared to its previous close with an average volume of 3,021,013.


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