BlueScope attacks Aussie importers

Reported by AAP
Monday, February 18, 2013
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Bluescope Steel

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BlueScope Steel has accused Australian importers of attacking their own manufacturing industry by illegally importing cheap, dumped steel.

Chief executive Paul O'Malley also said offenders were abusing tariff concession rules by "packaging" steel products made in Australia with imported products.

That allows them to falsely claim the concessions, which are designed to reduce duties when there is no local industry to protect.

The comments came as BlueScope's shares soared more than 15 per cent, or 57 cents, to $4.34 after flagging a return to profit and announcing a far narrower first half loss.

Despite an impressive turnaround following two disastrous $1 billion annual losses, it complains that dumping of cheap steel products hurts earnings by up to $100 million a year, creating an unfair playing field.

BlueScope notched up several successful anti-dumping cases against Asian steelmakers last year including penalties through new federal legislation, but the tariff concessions present a new problem for it.

"I think there are also instances where products are packaged up together to get the concession and not give domestic manufacturers or fabricators a fair shot at that," Mr O'Malley told reporters in a teleconference.

He compared Australia unfavourably with the US, where manufacturing is thriving due partly to an abundance of cheap gas-fired energy, while Australian gas producers eye off more lucrative exports to Asia.

BlueScope Steel on Monday posted a $12 million loss for the six months to December 31, a vast improvement on the $530 million deficit in the same period in the previous year.

It predicted a small second-half net profit.

The lion's share of its massive $2 billion in net debt has been whittled down to about $500 million with the looming proceeds of its joint venture on coated steel products with Japan's Nippon Steel to take it down to about $100 million.

"We've made some very tough decisions that have taken a business that a couple of years ago might not have had a future and given it a future," Mr O'Malley said.

The economic headwinds that hit BlueScope and forced it to end its export operations and make more than 1000 workers unemployed still exist, including the high Australian dollar, weak steel market and high iron ore prices.

However the fact that it posted an underlying net profit in the first half of 2012/13, which excludes one-off charges, of $10 million, convinced analysts that it has its costs under control.

Mr O'Malley also gave a positive economic outlook, saying a slowing in mining investment would prop up the dollar and low interest rates should eventually support housing starts and bank loan rates.

China's economy post-leadership transition should also improve as America's had since the election, he said.

Credit Suisse analyst Michael Slifirski says the increased focus on value added downstream products being made and sold around the world instead of just making steel as a commodity seemed to be working.

"Everything better is of their making ... the market is not better so they have repositioned the business to be profitable in a pretty sick market," he told AAP.

"That will get better for them at some stage and on their low cost base will do extremely well."

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