BlueScope Steel Limited (ASX: BSL) has gone up in share price since 11 November from $4.93 to its 10 January close of $5.60. This should make inquisitive investors curious about recent events that are behind the healthy rise.
Most recently, the company announced that it will be expanding its New Zealand iron ore sands export operations by adding a third shipping vessel in 2016. The slurry loading vessel will be chartered and about $50 million in costs will be spread over FY2016 – FY2018.
The third vessel is expected to add 1.3 million tonnes per annum (mtpa) of export capacity to the Tahoroa mine, raising total capacity to approximately 4 mtpa upon commencement in FY2016.
Another development was the ACCC's 19 December comments on the acquisition of Arrium Ltd's (ASX: ARI) OneSteel sheet, coil processing and distribution businesses in Sydney, Brisbane, Adelaide and Perth for $23 million.
ACCC Chairman Rod Sims said: "The ACCC formed the view that rival steel and tube distributors would continue to have alternatives to BlueScope in the supply of pipe and tube products, principally from manufacturer Australian Tube Mills and also through imports."
There are still some issues that the ACCC will be looking at to assess the proposed acquisition, such as market alternatives for processed sheet and coil product customers, but the announcement was a step forward for the review before the 20 February final decision.
In another acquisition, the company's proposed purchase of the Fielders and Orrcon Steel manufacturing businesses from Hills Ltd (ASX: HIL), also progressed forward with the ACCC announcing it has cleared the purchase of Orrcon. The Fielders' purchase is still being reviewed and the revised decision date is 30 January.
Foolish takeaway
Since August 2012, Bluescope has had an incredible run from as low as about $1.50 a share to $5.60. For an industry that had setbacks and difficult market conditions, the comeback is welcomed by investors.
It still had a $115 million net loss before abnormals in 2013, but the company is projecting that demand will be improving for products like coated steel, from 3.3 mtpa to 4.0 mtpa over the next three years.
Additionally, the GDP growth of its major ASEAN market countries is expected to remain strong – between 4%-7% pa and the US market is back on its moderate growth path. This general economic growth will in turn stimulate demand for construction and steel products.
