The BlueScope Steel Limited (ASX: BSL) share price is racing higher on Tuesday morning.
In early trade, the steel producer's shares are up 8% to a 52-week high of $23.99.
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Why is the BlueScope share price racing higher?
Investors have been fighting to get hold of BlueScope's shares this morning after it provided an update on its guidance for FY 2021.
As you might have guessed from the performance of the BlueScope share price, the update was a very positive one.
According to the release, BlueScope now expects its underlying earnings before interest and tax (EBIT) for the second half to be in the range of $1 billion to $1.08 billion.
This compares very favourably to its previous guidance range of $750 million to $830 million, but remains subject to spread, FX, and market conditions.
Why did it upgrade its guidance?
The release explains that the company's North Star business in the US was the main driver of this upgrade.
Management advised that Midwest benchmark HRC steel prices have risen by around US$250 per metric tonne since its original guidance was provided in February. This has resulted in stronger than expected spreads.
Also giving its performance a boost has been its Australian Steel Products business. It is also benefitting from improved realised domestic and export steel spreads. In addition, domestic despatch volumes are currently tracking ahead of the company's expectations. This is particularly the case for higher value products in the building and construction sector.
Complementing this is its Building Products business, which is now expected to deliver an improved result over the first half. This is due mainly to expanding margins in the North America coated business driven by rapidly increasing steel prices. ASEAN earnings are also anticipated to be better than prior expectations due to higher than expected steel prices.
BlueScope's Managing Director and CEO, Mark Vassella, said: "The business has gone from strength to strength, benefitting from strong spreads, prices and demand. All of the BlueScope team are doing an outstanding job in working to meet exceptional customer demand."
"The performance continues to demonstrate the unique strength and value of our business model. BlueScope is a very different type of steel company and is in a compelling position to take advantage of emerging trends, such as demand for lower density and regional housing and for e-commerce and logistics infrastructure," Mr Vassella added.
Following today's gain, the BlueScope share price is now up 36% year to date.
