Australia's BlueScope Steel Ltd, which last week cut its 2006 earnings forecast due to soaring raw material prices, said on Sunday China's booming construction market was the key to its success as a global player.
Australia's top steel maker, which blamed significantly higher zinc prices and lower tinplate volumes and prices for its second profit warning this year, said it would shift its focus to China, which Chief Executive Kirby Adams said represented one third of the world's steel consumption and output.
"China is now the biggest construction market in the world. It's a natural market in which we should participate," Adams told the Nine Network's Business Sunday programme.
"If we are to be a global player of any note, we have to be in China."
BlueScope said on Thursday its 2006 earnings per share would be at the bottom end of its 65-75 cent forecast, which would be 5.9 percent below the average of analysts' forecasts, according to Reuters Estimates.
It blamed reduced earnings from its Asian operations for the downgrade.
The company plans to close its loss-making tin mill in Port Kembla, south of Sydney, after a 19 percent rise in iron ore prices effective July 1, and its Taiwan manufacturing plant, cutting about 590 jobs across the group, some 3 percent of the workforce.
Separately, the head of Australia's number two steel maker, OneSteel, said on Sunday that rising costs were a key factor driving the proposed A$1.6 billion ($1.2 billion) merger of OneSteel and smaller rival Smorgon Steel, and he could not guarantee all its mills would exist in the longer term.
"I think those guarantees haven't existed for a long time," OneSteel Chief Executive Geoff Plummer, who will lead the combined company, told the Nine Network.
"We will have to cut costs from the operation to remain competitive and to achieve acceptable returns, and you wouldn't be able to do that with the two businesses operating independently."
The deal, announced last week, is subject to approval from the Australian Competition and Consumer Commission (ACCC) and Smorgon Steel shareholders, who are expected to vote on the bid in October.
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