BlueScope Steel Limited (ASX: BSL) shares are avoiding the market selloff on Friday.
In early afternoon trade, the steel producer's shares are up 1.1% to $17.94.
Why are BlueScope shares rising?
Investors have been buying the company's shares today after it released a market update this morning.
Although that update wasn't overly positive, it seems that the market was expecting much worse from the company. This appears to have caused a bit of a relief rally for BlueScope shares on Friday.
According to the release, BlueScope now expects underlying earnings before interest and tax (EBIT) for the first half to be in the range of $620 million to $670 million. This is below its prior guidance range of $700 million to $770 million.
Management advised that this reflects the underperformance of its North Star business, which is expected to deliver a profit result around half of what it recorded in the second half of FY 2023.
This is predominantly due to softer-than-expected benchmark steel prices and spreads across the half year. Management notes that US mini-mill benchmark spreads are now expected to be around US$100/t lower than the prior half.
The good news is that despite the softening spread environment, the North Star business continues to operate at full capacity utilisation, with the ongoing ramp-up of the expansion project progressing well.
Also failing to stop BlueScope shares from rising today is news that the project sale by the US-based BlueScope Properties Group has been delayed and is now expected to close during the second half of FY 2024.
Other than the above, all reporting segments are expected to perform broadly in line with guidance. This includes the Australian business, where softer-than-expected lagged benchmark spreads have been largely offset by stronger realised pricing and a favourable raw materials mix.
BlueScope shares are up almost 13% over the last 12 months.
