Bluescope to blast out of doldrums

Australia's biggest steel producer, BlueScope Steel, has provided new hope that economic activity is on the mend by deciding to return an idled blast furnace at its Port Kembla steelworks to production.

The renewed confidence the restart shows follows increases in global steel prices, and the recent surge in demand and prices for the key steel-making raw materials, most notably iron ore and coking coal.

The idled furnace was recently refurbished for A$372 million but its return to production, originally planned for June, was put on hold because of the sharp downturn in demand and prices brought on by the global economic crisis.

But in a clear response to improved demand and prices, the blast furnace is to be returned to production towards the end of next month.

Initially, the plan is to have Port Kembla's two blast furnaces operating at 75 percent of capacity (4 million tonnes of steel a year) from September. The move to full capacity is dependent on continued improvement in demand.

The return to production of the refurbished blast furnace underlines the rapid and largely unexpected improvement in demand and prices for steel. BlueScope's products are mainly used in the building and construction sectors.

In May, BlueScope deferred the restart of the blast furnace from the original June restart plan. At the time, it said no decision on the restart would be made until August 17, the date on which the group makes its 2009 profit report.

BlueScope shares closed 19¢, or 7.3 percent, higher at A$2.77.

- © Fairfax NZ News