Port Kembla's two blast furnaces are expected to operate at 100 per cent capacity throughout 2010 to keep up with growing demand and help BlueScope Steel achieve a profit for the financial year.
The significance of having the No 5 blast furnace back operating at full capacity was emphasised yesterday, when managing director and chief executive Paul O'Malley reported a net loss after tax of $28 million for the six months to December 31.
With improvements in the steel market and the successful recomissioning of No 5, he forecasted a small net profit by the end of June on the back of improved export and domestic demand and increased steel prices.
But the result will be sensitive to iron ore prices and the strength of the Australian dollar.
The relined blast furnace's performance was a key reason why Mr O'Malley predicted a small profit.
"We are very encouraged by the demand we are seeing at the moment," he said.
"We have got a strong balance sheet and liquidity. I am very happy about the performance of our Asian businesses. The ramp-up and relite of the No 5 blast furnace has been an outstanding outcome.
"Two years ago people thought the biggest risk that we had to our business was the blast furnace reline. I think it is an absolute credit to everyone who participated with that project at a time when it was pretty tough in the Illawarra.
"It was almost a one company stimulus package for that economy. The reline was done on budget, safely, on time and is now operating exactly as we would have hoped."
Mr O'Malley said the first half result comprised an unaudited loss of $61 million in the September quarter, followed by a $33 million profit in the December quarter, when the relined furnace became fully operational.
He said the return to profitability in the December quarter was encouraging but the gains were partially offset by the strong Australian dollar.
Mr O'Malley said improved trading conditions and increases in demand corresponded almost perfectly with the reignition of No 5 on August 19.
"For perfect timing perhaps we would have come on four weeks earlier, but given the gravity of the decision to complete the reline and start the furnace I think everyone involved made a good call.
"Everyone who participated in the project worked safely, which was outstanding, and the furnace is operating very, very well."
When No 5 was fully ramped up in October, it helped total slabmake at Port Kembla reach 83 per cent capacity for the first half, and Mr O'Malley only expects that to improve.
"We are seeing very strong activity in China and Asia," he said.
Australian and New Zealand Steel Manufacturing Businesses chief executive Noel Cornish emphasised BlueScope's ongoing commitment to reducing carbon emissions.
"Given 80 per cent of the steelworks' carbon emissions are generated as an unavoidable outcome of the chemical reduction process in our blast furnaces, our best opportunity to reduce our greenhouse emissions remains the proposed $1 billion-plus Steelworks Co-generation Plant."
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