Tania Archibald: Good morning, and thank you for joining us today. I'm Tania Archibald, BlueScope's Managing Director and Chief Executive Officer. With me is David Fallu, our Chief Financial Officer. We'll take you through the FY '26 results, the progress we've made against the agenda we set at the half and how we're positioned for the future. We'll then take your questions. I'd like to begin by acknowledging the traditional custodians of the various lands on which we meet and work today and pay my respects to elders past and present. I'll begin with safety. There is nothing more important than the health and safety of our employees and contractor partners. BlueScope has a strong safety culture built on a track record of extensive engagement with our workforce and an ongoing commitment to learn and improve. Throughout the year, our Global Safety Refocus program guided our work on critical risks and the effectiveness of the controls that manage them. But our performance is not yet where it needs to be. The tragic loss of a contractor at Port Kembla in November is a stark reminder of the importance of our work in this area. Now that incident remains under investigation by the regulator, and we're engaging fully with that process and we are determined to learn from it as we do with every serious incident across the business. Building on the progress we made in the year, we're continuing to drive a more systematic approach to managing critical risks and improving controls. This work is supported by our new functional operating model, which has brought all of our safety professionals into a single global team. This change is designed to bring the full force of the organization's capabilities to the greatest areas of opportunity and challenge as we seek to strengthen our safety performance. Financial year '26 has been a defining year for BlueScope in which we've accelerated the delivery of value, which has positioned us well to capture the next phase of growth and returns. I'm proud of what the team has achieved and believe we're well placed for the years ahead. In February, we committed to accelerate value delivery across 4 pillars. On growth, peak CapEx is now behind us and 2 of our major projects have just moved from construction to hot commissioning and ramp-up phase. That's the new state-of-the-art metal coating line in Western Sydney, and the new low emissions electric arc furnace at Glenbrook in New Zealand. On cost, in FY '26, we fully delivered the initial $200 million cost-out program, which we commenced just over 2 years ago and we've exceeded our targeted additional $150 million cost out program with the reshaped cost base in place from 1 July this year, delivering a simpler, leaner BlueScope. On property, we've accelerated the delivery of value with a range of project deliverables through the year, highlighting the significant value in the surplus land portfolio. And finally, for shareholders, we've delivered a significant step-up in returns whilst maintaining a robust balance sheet. Put simply, we've executed on our commitments. Turning to the headline numbers. FY '26 demonstrated the strength of the portfolio as we shift from a heavy investment phase to one of ramping up shareholder returns. Underlying EBIT of $1.27 billion was materially higher than FY '25, whilst second half EBIT of $716 million was above the top end of the guidance range supported by a stronger North American contribution, record Southeast Asian performance and delivery of cost and productivity targets more than offsetting cyclically low Asian steel spreads. Underlying net profit after tax for the year was just over $800 million and the balance sheet finished the period in a strong position at $600 million net debt. With the major investment program ramping down across the next 12 months, we're continuing to ramp up returns to shareholders. The Board today approved an unfranked final dividend of $0.65 per share and an unfranked special dividend of $0.70 per share, which when paid in just under a month's time will see us delivering on our calendar year '26 commitment of $3 per share in distributions. Shareholders have been patient through the investment phase and that patience is now being rewarded. Turning to guidance. We've entered the next half with solid momentum. We see continued strength in North America, a solid demand environment in Australia and early signs of recovery in New Zealand. In China, overcapacity continues to weigh on regional steel spreads. For first half '27, we expect underlying EBIT in the range of $860 million to $960 million, subject to spread, foreign exchange and market conditions. Now the assumptions that underpin this outlook are set out on the page and David will take you through the regional detail shortly. BlueScope today is a lean, modern manufacturer of high-quality steel products, systems and solutions that our customers know and trust. Our purpose and bond are enduring and grounded in care and respect for our people, our customers, our shareholders and the communities in which we operate. We're guided by 3 key strategic themes that focus on customer value creation, operational excellence and shareholder value delivery. Our decision-making is supported by our long-standing financial framework which drives a focus on resilience and returns, a disciplined approach to capital allocation and an unwavering commitment to deliver long-term shareholder value. We're strategically differentiated by our ability to combine highly competitive manufacturing assets with deep customer relationships, leading product development, extensive channels to market and strong strategic marketing capabilities. With a long-standing presence and deep manufacturing and market expertise across Australia, New Zealand, North America and Asia, we bring decades of know-how to every market we serve, and our in-country, for-country approach keeps us close to customers and end-use markets. Through these elements, we aim to deliver resilient through-cycle earnings, robust and growing cash flows and higher shareholder returns, all of which we're seeing in these results. Turning to growth, where we've been working hard to deliver our 2030 $500 million EBIT uplift target. In North America, we're continuing to target more than $200 million of improvement anchored by North Star debottlenecking and our coated and painted strategy, including the BCP turnaround. In Australia, we're targeting more than $125 million, supported by continued growth in COLORBOND and TRUECORE steel backed by the new Metal Coating Line #7 and the plate mill upgrade, which will enable capability, service and quality improvements. In Asia, we're targeting a $75 million uplift through capital-light growth of value-add products and solutions across Southeast Asia, and we're pursuing targeted growth segments in China. In New Zealand, continued growth in COLORSTEEL and the benefits of the newly commissioned electric arc furnace will enable the $75 million growth target. During the year, we've made good progress on the major projects, which underpin earnings resilience and growth. At Erskine Park in Western Sydney, the new 240,000-tonne Metal Coating Line #7 achieved a significant milestone of metal on strip on the 4th of August. Production ramp-up will continue through this half. Now this is a state-of-the-art metal coating line with high levels of automation, process control and smart technologies. Now the project has taken longer and costs more than initially anticipated, largely reflecting the high inflation environment for capital projects as well as the extensive wet weather delays throughout the construction period. Now critically, this investment underpins our long-term supply of TRUECORE and substrate for COLORBOND, both of which achieved record sales in the year. The new lower-emissions electric arc furnace at Glenbrook in New Zealand produced the first heated steel on the 3rd of August. Similar to the new metal coating line, ramp-up and transition to operations will occur across this half. Now this marks a key milestone for our New Zealand operations, enabling a step change in our emissions profile and most critically, a transition to a more flexible demand-responsive production model. The North Star debottlenecking program is progressing well across all 9 components, unlocking an additional 300,000 tonnes per annum of capacity at one of the best positioned minimills in North America. The overall program is running on schedule and in line with budget with 3 of the project components now complete. The Port Kembla Plate Mill project remains on track with the processing upgrades already delivered and in operation. With the first phase now complete, the next phase of the project being the product quality improvements from the new furnace are on track for delivery mid next calendar year. Importantly, the plate mill upgrade delivers new heavy plate capability with broader application to defense, infrastructure and renewables projects. The transition schedule for the #6 blast furnace reline project has been pushed back to early second half FY '27, reflecting the scale and complexity of the project. And similar to Metal Coating Line #7 has experienced inflation in construction costs. Number 5 blast furnace continues to perform strongly, which gives us flexibility in cutover timing and no impact to our operating risk profile. But importantly, the #6 reline project secures Australia's domestic supply of iron for up to the next 20 years whilst we work through our decarbonization pathway. On climate and sustainability, we remain firmly committed to executing our strategies and delivering on our targets. In Australia, we're exploring various pathways for decarbonization. Now one of these is the NeoSmelt project that we're leading in joint venture with Rio Tinto, BHP, Woodside and Mitsui Iron Ore Development. NeoSmelt is an Australian industry R&D project designed to secure the long-term future of Australia's Pilbara iron ore industry and provides BlueScope a potential decarbonization pathway. The project is aiming to build a pilot direct reduced iron and electric smelting plant designed to use blast furnace grade Pilbara ores in DRI production, a major step forward from today's DRI technology. The partners are targeting a final investment decision by the end of this calendar year, subject to government support. In North America, the North Star and BlueScope Recycling teams are ramping up the production of low-residual shred and reducing our reliance on pig iron without affecting product quality or mill efficiency. In New Zealand, the new EAF will deliver a step change in our site emissions by almost 50% and will reduce New Zealand's overall country emissions by 1%. The EAF, coupled with geothermal power supply, also enables new lower-emissions product offerings, which we're delighted to bring to market. None of these investments have been straightforward, but they also underline 2 critical themes for manufacturing. Firstly, a reminder that capital is mobile and seeks the best risk-adjusted return; stable, competitive and predictable policy settings, attract long-term investment while uncertainty and structural cost disadvantage discourage it. Secondly, where the manufacturing industry is today in Australia is largely the product of policy choices made over the decades. While other nations have competed intensely for manufacturing investment through a variety of strategies, Australia has largely stayed on the sidelines. Now is the time to change that. Australia's Future Made in Australia agenda is the most significant shift in industrial policy in a generation, and it provides a very real opportunity to reshape Australia's future. Public policy settings should help create the conditions that allow globally competitive manufacturers to invest, grow and succeed. In turn, strong financial performance underwrites continued investment in capability and innovation, including lower-emission steelmaking. At BlueScope, we remain committed to a vibrant and competitive manufacturing base in Australia for the long term. That's why we continue to advocate for structural reform of Australia's energy market. It's why we support a level playing field via an effective trade remedies regime, and it's why we continue to drive Project NeoSmelt, which has the potential to lay the foundations for a green iron export industry. Moving to cost and productivity. We fully completed our initial $200 million cost and productivity program in the half, which was a great outcome. Earlier this year, we went further and established an additional cost reduction target of $150 million on a gross basis. Now we've exceeded delivery of this target, so we now expect the full $150 million to flow into FY '27 as a net benefit. The team has done a fantastic job executing on this target and resetting our functional operating model. The result is a simpler, leaner, more agile BlueScope. On property, our overarching objective is to accelerate the delivery of value from our 1,200 hectare portfolio, which sits in sought-after industrial locations with proximity to port, rail and energy infrastructure. Now as a reminder, over 60% of the total portfolio is already appropriately zoned and able to be developed. Across the year, we made great progress with activities ranging from planning and zoning to development activities and sales. Moving into FY '27. Our focus is on progressing the logistics hub at Western Port as we commence the process of shortlisting proposals and the commercial and structuring work that supports value delivery from this initiative. We're also progressing opportunities for Port Kembla that are complementary to our manufacturing operations, including a focus on the development of an energy precinct along with other planning and development activities. On shareholder returns, to quickly recap, in February, we announced a plan to deliver $3 per share in returns in calendar year '26, representing a material step-up in distributions to approximately $1.3 billion, which is around 10% of BlueScope's market cap. With today's dividend announcement, this plan is being fully delivered. Given the ramp-down in our major capital investment program and the ramp-up in cash generation, we've announced a plan to repeat the $3 share return in calendar year '27. This plan is supported by a robust balance sheet. Before I hand over to David, let me step back and cover the macro and industry backdrop and the longer-term opportunities across our business. In Australia, construction activity remains resilient, supported by housing, infrastructure and nonresidential demand, and the medium-term outlook is underpinned by favorable demographics and a sustained housing shortage. Value-add and branded products remain key drivers of volume growth as our products and systems continue to gain traction. As for spreads, regional overcapacity, driven by record levels of exports from China, continue to pressure spreads and margins in the Australian business. The Australian business has proved to be extraordinarily resilient in the face of the sustained low spread environment with a firm focus on cost and productivity and continuing to grow the value-add portfolio, providing tremendous upside operating leverage. In the United States, demand remains supportive across our key markets of auto, nonresidential construction and manufacturing. The data center rollout and broader e-commerce infrastructure have underpinned solid nonresidential construction demand. More broadly, North America continues to be a great place to make and sell steel. The regulatory and an industry environment is favorable and supportive of the demand outlook across steel-consuming sectors and our footprint and quality of assets position us well to capture continued economic growth. We also have a clear runway to grow with the incremental expansion at North Star adding low-cost capacity into a market that remains structurally short of steel. Across Southeast Asia, we have an outstanding footprint across every major economy. The region is becoming increasingly attuned to the value proposition that BlueScope has spent the best part of 6 decades embedding. Our positions are well established with latent capacity to capture growth in this fast-growing and dynamic region. In New Zealand, demand conditions have been soft, but we're starting to see signs of recovery. Much like Australia, favorable trends in demographics and demand will drive medium- to longer-term volume growth for our product suite including the new low-emissions offerings enabled by the EAF. Whilst I set out a constructive picture on demand across most of our regions, cost escalation remains the persistent challenge. It was compounded this year by the Middle East conflict flowing through to fuel, freight and input materials, and it underlines why our relentless focus on cost and productivity sits at the heart of how we run this business. Above all, it's the design of our portfolio that delivers value through the cycle, positioning us to capture our targeted growth while absorbing the headwinds along the way. I'll now hand over to David to take you through our regional performance and the financial framework.
David Fallu: Thanks, Tania, and good morning, everyone. Turning to the regional performance, starting with Australia, which delivered underlying EBIT of $188 million in the financial year with a second half EBIT of $66 million. Domestic dispatches increased to 1.15 million tonnes in the half, driven by residential and nonresidential construction demand with COLORBOND and TRUECORE steel hitting a record volume with 654,000 and 155,000 tonnes in the year, respectively. The result reflects sustained low Asian steel spreads and a non-repeat of one-offs, partly offset by cost, productivity and value-added volume gains. As an integrated, modern manufacturer in Australia, our priority is to keep growing domestic and value-added volumes while reducing costs to support margins. With performance remaining challenged by soft regional spreads, you can see the importance of focusing on shifting more volume to domestic sales and more of those sales toward value-added and premium branded products. And pleasingly, that trend has continued with our record COLORBOND and TRUECORE volumes this year. Cost also remains critical, and the operating model reset has helped in this space, but our work here needs to be ongoing, not only to offset inflation, but to enhance our earnings profile in concert with the work on value-added growth. Turning to North America. North Star delivered underlying EBIT of just over $800 million in FY '26 with a second half EBIT of $484 million, up 50% on the prior half on materially stronger realized spreads and increased production capacity. We expect to see further benefit of the significant benchmark spread increase flow into FY '27 due to the nature of longer pricing lags and other pricing mechanisms to cover around 1/4 of North Star's sales book. The business continued to operate at full utilization and effectively managed its cost base to negate conversion cost increases in the half. North Star remains an outstanding asset, with its continued margin outperformance relative to peers due to operational capability, geographical location and a strong performance culture. We continue to unlock capacity in the mill to grow our volumes and earnings from this great business. Buildings and Coated Products North America delivered an EBIT of $230 million in FY '26 with a second half EBIT of $101 million, 20% lower than the prior half. Across the segment's 3 component businesses, BlueScope Buildings performance softened slightly in the half with some seasonality and slightly lower volumes due to a temporary lull in new project work 6 to 12 months prior to the period as the market digested a range of trade policies and measures following [ Liberation Day. ] BCP performed in line with expectations, delivering a loss for the half, however, an improving performance across the period. And Steelscape's performance improved on higher volumes as demand recovered from the prior period's tariff-related volatility. Across North America, our priorities are to continue to maximize volumes at North Star, expand buildings where returns are clear, selectively grow downstream value and deliver the turnaround of BCP. We are well positioned for growth in the region and the successful execution of these priorities supports the longer-term opportunity of bringing our painted steel value proposition to the North American market. Asia delivered underlying EBIT of $177 million in FY '26 with a second half EBIT of $81 million, down around 15% on the prior half. The region is delivering strong returns with further upside to be realized from its unrivaled footprint for regional growth. Southeast Asia had a record year with all countries showing improvement from sales and marketing initiatives and operational excellence. The opportunity here is significant, not only from the strong positions our brands have in the market and the demographic tailwinds in the region, but also from the significant latency we have in the region to capture this growth, making it a very capital-efficient opportunity. China was lower than the prior year on seasonality and weak domestic conditions. And as we've previously announced, we completed the sale of our 50% interest in Tata BlueScope Steel during the year. Our priority across this business is to strengthen customer propositions and selectively expand higher-value downstream solutions as the markets continue to mature. New Zealand and Pacific Islands recorded an underlying EBIT loss of $1 million in FY '26 with a second half EBIT of $16 million. The result was thanks to improved product mix as COLORSTEEL delivered a record performance despite softer conditions, along with an improved cost performance. The EAF was -- installation was largely finished at the end of the financial year, which is a fundamental strategic reset of the business. The EAF will reshape the earnings and emissions profile of the business with the benefits starting to flow through and a full run rate following the FY '27 transition year. Turning to the drivers of the year-on-year movements in underlying EBIT. Looking at FY '26 versus FY '25, the largest contributor was a material lift in net spreads driven predominantly by stronger realized pricing at North Star. Volume and mix contributed positively, reflecting the stronger domestic volumes in Australia and continued growth in premium branded products, including COLORBOND, TRUECORE and COLORSTEEL. Conversion costs and other costs reflected the benefit of our cost and productivity program, offset with inflation and escalation. As a reminder, our cost and productivity program benefits are not just sitting in conversion costs. They're across a range of buckets, most notably raw material costs, which actually more than offset higher conversion costs in the year. Comparing the second half of FY '26 to the first, similar dynamics applied. Looking at the guidance period across our regions, noting the group first half FY '27 guidance range and assumptions Tania mentioned earlier, in North America, we expect a result more than 1/3 higher than the second half of FY '26, with North Star benefiting from stronger benchmark spreads and improved cost performance. Within BCPNA, improved volumes and ongoing turnaround initiatives support a stronger result. In Australia, we expect a result around 2/3 higher than the second half of FY '26, driven by higher realized spreads, stronger domestic volumes and continued cost discipline with impacts from major projects transitions reflected in the outlook. In New Zealand and Pacific Islands, earnings are expected to be around 1/3 lower than the second half of FY '26, largely reflecting EAF commissioning impacts, partly offset by improved benchmark pricing. In Asia, we expect performance broadly in line with the second half of FY '26 with seasonally softer conditions in Southeast Asia, offset by stronger seasonality in China. Finally, corporate and group is expected to be approaching 3x the second half of FY '26 result. This primarily reflects a non-repeat of the $76 million West Dapto land sale profit recognized in the prior period. Turning to our financial framework, which remains a critical guiding document and it's central to how we run the company. The framework remained unchanged. However, we've evolved the settings within it to reflect a stronger, more resilient earnings base, materially improved cash generation and confidence in the trajectory of capital expenditure within our growth projects now nearing completion. As we've noted in recent years, ROIC has been impacted by the once-in-a-generation capital program, adding to our operating asset base, while Asian spreads have held at bottom of the cycle levels. In the year, ROIC improved, thanks to improved contributions from North America and continued strength in Asia. On cash flows, in FY '26, free cash flow was $240 million, impacted by our peak CapEx. As a reminder, shareholder returns are paid from operating cash flows less sustaining CapEx with the commitment to distribute at least 75% of this number. Importantly, with peak CapEx now behind us, the cash flows available to fund distributions will be materially higher going forward. Turning to our balance sheet. Net debt at year-end was $600 million, well within our target range, thanks to stronger U.S. spreads and specific timing of cash flows. We also have ample liquidity, and we've taken the opportunity to enhance this position further in July to ensure a frankly, rock-solid maturity profile. The combination of the balance sheet position and liquidity gives us a great platform to support our planned returns in calendar year '27. Capital expenditure was $1.5 billion for the year, in line with expectations with the second half being our peak CapEx for the half. The profile steps down from here. FY '27 CapEx remains slightly elevated as we complete the remaining $500 million of the program before normalizing further. As a reminder, our typical annual capital expenditure is approximately $600 million to $700 million with around $450 million to $500 million in sustaining CapEx and foundational spend and typically a further $100 million to $200 million in organic and incremental growth investments. On shareholder returns, this calendar year saw us accelerate the step-up in distributions with a plan to deliver $3 per share in calendar year '26 and $1.65 per share paid during the half. As noted, the Board today approved the unfranked final ordinary dividend of $0.65 per share as well as a $0.70 per share unfranked special dividend as an alternative distribution to the previously flagged $310 million buyback program, which we've been unable to execute during the period. This sees us fully deliver our calendar year '26 plan with approximately $1.3 billion in distributions this calendar year. This level is significantly higher than the periods in the decades prior, by a significant margin. As we look ahead, we've announced today that we plan to deliver at least a further $3 per share in calendar year '27, with the rebased ordinary dividend complemented by other methods such as special dividends and buybacks where available. BlueScope has always been a highly cash-generative business with the last few years seeing this directed to our major investment program. Clearly, we're getting back to more normal cash flow numbers, which support the stronger return levels. As such, it's exciting to see that our approach in this space is designed to be sustained, not a one-off. And with that, I'll hand back to Tania.
Tania Archibald: Thank you, David. Before we take your questions, I want to reiterate a number of points. The results today demonstrate the strength of the portfolio and our execution capability. Earlier this year, we committed to accelerating the delivery of value. We've delivered on our commitments over the last half, and we'll continue this work into FY '27. With the major investment period ramping down, we're ramping up returns to shareholders with a significant increase in calendar year '26 planned to be repeated in calendar year '27. BlueScope enters this next phase from a position of real strength as a lean, modern manufacturer of high-quality steel products, systems and solutions that our customers know and trust. I want to close by thanking our people for their dedication through a demanding year, our customers and partners for their trust and our shareholders for their continued support. And with that, we'll open the line for questions.
Operator: [Operator Instructions] Your first question today comes from Ramoun Lazar with Jefferies.
Ramoun Lazar: Just a couple of quick ones for me. Maybe if we can dive into the ASP performance a bit more in the half. Look, revenue per tonne was a step up across that business. So I'm just trying to break down what were some of the drags in that second half that you saw impacting those results? And then for the first half, if you could maybe just outline your expectations around the transitional impacts from the BF6 delays and the MCL7 ramp-up, that would be helpful in trying to get to a baseline earnings number for this business going forward.
David Fallu: Yes. No, Ramoun, look, I guess just in terms of the specifics around some of the ASP performance, I mean there was a component of one-off benefits not being repeated in the second half. You'll recall that first half, we had a one-off tax benefit in the first half period, which wasn't reported. And then there's -- as we're working through the stages of blast furnace 6 transition, we -- that has an implication for some of the operational costs that we saw in that second half.
Tania Archibald: Probably what's also worth adding in terms of the performance in the second half. We're working with low numbers. There's a lot of moving parts within ASP. It only takes a few things to occur, and it can -- it looks like it sort of has a significant impact. If I sit back and look at the business, the cost and productivity performance in Australia has been very, very strong. The fact that we're selling record levels of COLORBOND and TRUECORE. Thankfully, we've managed to start up Metal Coating Line #7, which is now in the ramp-up phase. That's going to underpin that long-term growth in COLORBOND and TRUECORE. We think there's a lot of upside there. What we're dealing with is a reasonably solid demand in Australia, but we have a very low spread environment, probably a bit of an impact from FX as well. But we're dealing with probably -- with the lag impacts. The way the lag spreads work is probably one of the toughest spread environments that we've seen. So the fact that the Australian business is still profitable, it's demonstrated enormous resilience, and it says to me that we have tremendous upside in the business. In terms of the outlook into the second half, there's a few factors, again, dealing with the low numbers. There's a few things like we ran a particular trial in the fourth quarter of '26 around using some higher pellets and lump that was part of the decarbonization trial, and that drove up the cost, which then lagged into the second half. There's probably a little bit of disruption, I think, in terms of how to think about the lags on iron ore and coal because what we're doing is building up a bit of stock in terms of the transition for the blast furnace. And so that will disrupt what you would have as the normal lags for iron ore and coal.
Ramoun Lazar: Got it. Any sort of quantification of those impacts, Tania or David, that could help us in terms of the first half?
David Fallu: Look, I think what we'll look to do, Ramoun, is probably more an overall review once we've gone through the transition of blast furnace 6 to see if we can provide you with additional help around the sort of the lags that you're seeing. But in terms of the overall sort of impacts from what Tania was referring to specifically, that's about between $20 million to $30 million impact.
Ramoun Lazar: Okay. That's helpful. All right. And then just the second one, just on North America and the pricing lags there. My understanding is there's a proportion of those tonnes that are now contracted on a fixed price basis -- or on formulas under fixed price basis. Can you maybe just touch on those, Tania or David, how they're impacting the first half? And then when those potentially get reset? And I guess, is that a tailwind or a headwind into the second half?
Tania Archibald: Yes. So the fixed price or fixed spread contracts, they've actually always been there. They've always been part of the mix. It's something that we decided to ramp up a little bit more post the expansion. And it just goes to how we target and partner with customers for the long term. For the longer-term perspective, it does reduce volatility, but I appreciate that when you have movements in the index in the short term, it can create a bit more of the near-term volatility. So it's more pronounced when you've got these high movements. I don't think they're necessarily going to go away. I think that will be an important part of the book going forward, not necessarily changing the component, but I think they're going to be there. But I think it's also about how we think about the longer term how we protect in down cycle conditions as well. So it's really just a bit of longer-term thinking. Now they do reset at the end of each calendar year. So it's not like they're a permanent structure. There is a renegotiation that occurs every year. Do you like to add anything there, David?
David Fallu: No, I mean, effectively, it's a bit of a component of how we hedge the sales book. These are typically contracts that are a lot stickier. There's quality and qualification requirements. And yes, it kind of forms part of how the North American team manage the risk around sales.
Ramoun Lazar: Right. And presumably, I mean, if they've set at the end of the calendar year, they'd be well out of the money compared to where spot prices are currently trading.
David Fallu: That's right.
Operator: Your next question comes from Owen Birrell with RBC.
Owen Birrell: I just wanted to ask a question around the $150 million cost reduction program. You provided a good split between, I think, 60% headcount reduction for '27 and then 40% external spend. I just wanted to understand, I guess, on the external spend area, are there any sort of key target areas that are obvious to reduce the cost there? And similarly, with the headcount reduction, if you can provide a bit of color around which divisions or which regions you're expecting to see that cost reduction from the headcount?
Tania Archibald: So I'll start off with the headcount reductions, and then David can give you a bit of flavor on the external spend. In terms of the headcount reductions, what we've done is basically put in place a 4% headcount reduction across the global portfolio, slightly less than that in Australia just because of the ongoing rounds of optimization that we've been doing over many years now. But broadly, it's about 4%. It's primarily centered around corporate functional and administrative roles. Now there is a number of operational roles in parts of the portfolio where we've gone a bit deeper in terms of uplifting the level of performance. But by and large, what it reflects is a reset of our functional operating model, whereby we've taken the functional teams, which were previously nested within each business unit and each sub-business unit, and we've moved them into global teams. And what that does is drive greater scale and efficiency, better focusing of effort. And it means that we've been able to take out a little bit of duplication that might have occurred over the last couple of years. And yes, so that's probably the best way to explain it, I think. And external spend?
David Fallu: Yes. So that's across a range of areas as we talked about through the FY '25 to '26 walk-through. So probably the largest component actually came from raw materials and IT. Within the SG&A functions, it's really been the opportunity to drive that in a much more coordinated way through having those functions come in into a central area of practice. And then from a raw materials perspective, it's primarily around productivity and efficiency in raw materials utilization, which has enabled the teams to drive an improvement in external spend in that space.
Owen Birrell: And can I ask just a question on the increase in Middle East costs. You called out sort of fuel and freight. Are you expecting a reversion in some of those costs if we do see a settling of the Middle East issues?
Tania Archibald: I think there will be some benefit that has to be -- I mean, it has settled a little bit. I mean we've seen it in, obviously, the fuel, the freight rates, raw materials, including paint. The biggest area of heartburn that we've had has been around the aluminum supply. We've now resolved that one. So I think it will come off, and we'll see it principally in those headline numbers around fuel and freight most specifically. But again, inflation is an area that we've obviously got to watch very, very carefully. We're not alone in this. It's probably a bit more pronounced in Australia than elsewhere, but it just goes back to that relentless focus on cost and productivity.
Owen Birrell: And I know you haven't -- unlike many other companies, you haven't called out that cost inflation impact. Do you have a sense of what that has been in FY '26 and how much it could revert into '27?
David Fallu: Look, I think in terms of the overall impact in FY '26, the Middle East reversion wouldn't be material. I think as Tania has said that we've actually seen -- it caused a lot of challenge around making sure your supply chain was resilient in that space. We had a couple of suppliers who were based in the Middle East that obviously had -- were the apex of challenge for us. We've resolved those. But I'm not expecting that -- that was more ensuring supply as opposed to it being something where I think we get an improvement in price year-on-year.
Owen Birrell: Okay. Do you mind if I ask a second question just on the sales side. Out of ASP and New Zealand, we noticed a bit of an uplift in the export volumes in the second half. I'm just wondering where are these volumes going? And are these volumes still profitable given some of the trade tensions that we're seeing at the moment?
Tania Archibald: Yes. The uplift in the second half is pretty much normal seasonality that you see. We often end up with a bit of a stock build in the first half and then a release in the second half. Yes, the -- given all the trade actions that have been incurring globally, you've obviously got the tariff all around the U.S. You've got Europe has put up the tariff wall. So yes, that does dampen overall returns that we earn on the export market. We did deliberately put some slab over into New Zealand. And that was really just backup planning as we start the new electric arc furnace. We go through the transition there. We just wanted to make sure that there was no operational disruptions to our iron and steelmaking. So there's a little bit of extra slab there. I think, though, what it does underline is, again, the incredible importance in Australia of continuing to grow the domestic franchise, continuing to grow the value-add components in particular. And again, that's why the start-up of Metal Coating Line #7 is just so important to us. We still see ongoing growth in COLORBOND. We still see ongoing growth in TRUECORE and continuing to grow that and reduce over time the reliance on the export market to -- as a relief valve or release valve for the production volumes that we have coming out of the blast furnace is quite important to us.
Operator: Your next question comes from Harry Saunders with E&P.
Harry Saunders: Firstly, just a follow-on from Ramoun's. Just wanted to clarify that $20 million to $30 million quantified about the first half guidance for Australia. Is that across all the impact from the blast furnace and MCL7? And is that sort of expected to be confined largely to the first half? Is the sort of one-off so it should reverse? Like maybe how much of that is that depreciation transitional charge?
David Fallu: No. Sorry. Harry, I was referring to the impacts of cost into inventory through various trials that have been utilized within ASP as part of their ongoing decarbonization work. In terms of transitioning from -- to blast furnace 6 into full ramp-up, that -- we would treat that as FY '27 as largely being that transition year.
Harry Saunders: Okay. So you're not sort of quantifying how much is sort of one-off across the blast furnace and MCL7?
David Fallu: No, no, not at this point.
Harry Saunders: Okay. And, yes, maybe just on the working capital outlook given we talked about some potential build of raw materials ahead of the transition there across the first half and the full year?
David Fallu: So yes, look, in terms of work, I think the team has done a good job in terms of managing that in the context of those inventory builds. Again, in terms of the release of that, we would see that coming through in -- towards the end of FY '27 as a release. But the reality is that the -- there will still be a degree of elevated working capital to support the transition of both blast furnace 6 and the EAF through the course of FY '27.
Harry Saunders: Got it. And maybe just a follow-on, if there's any view in sort of North American steel spreads beyond the first half, I mean where -- I guess, do you eventually see that sort of settling at mid-cycle? And how long do you think this current strength could be sustained? And what do you think are the key drivers behind this strength?
Tania Archibald: It is an interesting question around North America. I mean, obviously, we have a very positive trade and macro environment that we're looking at, at the moment. More broadly, it's hard to come up with a better place to make and sell steel globally. If you put aside the tariff war, you've got a very large market. It's a very resilient market. We still see healthy demand there. What you have is very strong supply side discipline. It's obviously dominated by electric arc furnaces, so wonderful supply side discipline in terms of the ability to pull back in the face of demand swings. And I think for North Star, obviously, we have a very high-performing asset, probably the highest performing asset in North America. In terms of how long it sustains for, we can't really control that. What we're focused on is maintaining the performance of North Star and continuing to grow that very valuable asset. I would say, Harry, what we see at the moment is auto is quite healthy. I was asked previously around the impact of EVs coming out of China. But what we see is pretty robust demand in the U.S. The construction part of the market is reasonably strong. There's quite a bit of demand that's been put in there by data centers. And we know that part of the order book in the BlueScope Buildings area is about 20%, part of their backlog that they have into this half, about 20% of that would be made up by data centers. So we know that data centers is driving a degree of strength into the U.S. demand environment as well.
Operator: The next question comes from Lee Power with JPMorgan.
Lee Power: Tania, just on the -- I mean there's been a few questions on it, but the $150 million into one -- into FY '27 just on the cost side. Like where do you think the kind of escalation of conversion and other costs kind of tracking because I think that was $98 million in FY '26. So I'm just trying to work out, you obviously got a lot of cost pieces, but it feels like kind of was probably a little bit overly optimistic into '26. So what are you seeing from an escalation side into '27?
Tania Archibald: I might give you the escalation question, David.
David Fallu: Yes. So look, in terms of escalation into '27, outside of escalation that we've seen into sort of delaying cost in major projects. Broadly, it's been sort of within sort of more normal usual expectations. So low to mid-single digit across most of the areas of the portfolio. Our team has been doing a particularly good job around sort of management of energy costs we've largely reset to market in that space. So it's not the same degree of impacts that we've seen over the last couple of years.
Lee Power: Okay. And then the -- your comments just then, Tania, around the demand and supply outlook in the U.S. So clearly, it's like a very strong time at the moment. I mean you're still running a $750 spread in your assumptions for North Star, so that's still down from kind of spot levels? Is it more on the supply side or the demand side that you think drives that reversion?
Tania Archibald: It's probably a little bit of both, I guess. I mean, we simply take the standard formula. What I would say is that demand is really quite resilient. I think the other factor to note is that the service centers, they don't have a lot of inventories at the moment. They're relatively light on inventories. Is there anything you want to add?
David Fallu: No, look, I think the reality is it's largely a contract market fundamentally at the moment. There's a test that people have contracted volumes, they're taking it. And there's not a lot in the spot. And so I think realistically, there's an element of lag that's playing into that. And ultimately, as we go through sort of recontracting, you'll see that play into price, assuming that the spreads remain where they are.
Tania Archibald: And we are also watching the new supply that's coming online. Of course, the U.S. continues to be structurally short. We know that West Virginia will come online over the next 2 years. We're watching that very carefully. But broadly speaking, I think it's quite a positive demand environment.
Lee Power: Okay. And then just one final one, if I can. Just on BCP, it seems like you've made some decent traction there. Like how do we think about that in the U.S. going forward?
Tania Archibald: Yes. So the ambition remains absolutely undiminished, Lee. We -- I think we've made no secret of the fact that we're a couple of years behind where we wanted to be originally. But we still see a very large market opportunity for the value proposition and capability that we have. We have a relatively new management team. And whilst they might be new to BlueScope, they have deep experience in the industry. They're doing a lot of heavy lifting on improving the quality of the assets, the manufacturing performance and the lead times and basically bringing the lines up to the standard of BlueScope. And so we're making sure that we're competitive to the tolling alternative, still very focused on bringing in the single bill option and ultimately, the branded offer. So we can still see the pathway there. We still think we still are targeting an appropriate return on the original invested capital. But yes, we are a couple of years behind, but we're making good progress. I spent a lot of time engaging with the BCP team and I'm very confident in that team, and I can see the progress that's being made in the business.
Operator: Your next question comes from Peter Steyn with Macquarie.
Peter Steyn: I was going to ask along the same lines as Lee. I was just curious in the fullness of time, what would your broad expectation be presuming you're still going to make midstream investments?
Tania Archibald: Yes. It's an interesting question, Pete, as to whether or not you actually need to integrate from the paint lines back through to metal coating and cold rolling and ultimately to North Star. I think it's an option that sits there. I don't -- I think there's a different set of mix that exist in the U.S., which may mean that, that's ultimately not required. I think that we can have a highly competitive business without necessarily needing to be fully integrated, but it's a question that we will continue to test. What we're very focused on right now is uplifting the performance of BCP and making sure it is competitive, again, in the tolling market and then ultimately in the single bill and ultimately the branded market. So I think it's an interesting question that sits there, Pete.
Peter Steyn: Got you. And then maybe just on the property side of things. Just a perspective on how you're thinking about balance sheet utilization in the context of that business. Do you generally see it as only a sale or how much of -- or is there an opportunity for on-balance sheet development to maximize value? And if so, which properties are you most likely to go down that route with?
David Fallu: Yes. Thanks, Peter. Look, in terms of how we look to approach that. But the most important thing for us is to sort of remove any of the uncertainties that kind of bring a discount to that property value. That's why the overall rezoning at Port Kembla is a huge benefit to us. And to the degree that we need to utilize our balance sheet to help support that, we obviously can. But I'd say that the kind of -- there's many ways that we can sort of look to ultimately realize or monetize the opportunity that sits there. And it wouldn't be kind of the first quarter call to utilize our balance sheet to be the primary supplier into that space where we can leverage off capability elsewhere.
Peter Steyn: So one could think about some specific partnerships, I guess...
David Fallu: Yes, exactly. You've seen us, obviously, where it's already effectively at full value like our residential property at West Dapto. That probably just lends itself towards a straight sale. There's not much point kind of partnering in that space. Where there's still sort of more opportunity for value uplift, that's where we will consider the partnership opportunities.
Peter Steyn: And if I could, just a little bit of an extension on the energy option PK. Could you maybe just color that in ever so slightly, just to understand better what your thought process there is?
Tania Archibald: So we're very mindful that with the land, the surplus land that sits around the manufacturing operations. We're very focused on how we can drive synergy for our existing operations. So we've been doing quite a bit of exclusive work around energy precincts, and that could form a variety of options, including, for example, batteries. We're also very mindful with Port Kembla of the long-term energy infrastructure that would be required for an eventual change in steelmaking. So I'm obviously thinking longer term here. So just in terms of the infrastructure that would need to be put in place, the easements that need to be preserved, that's all part of our longer-term planning around property portfolio.
Operator: Your next question comes from Scott Ryall with Rimor Equity Research.
Scott Ryall: Just 2 quick ones, hopefully. MCL7, so you've talked about now being in ramp over the course of the next 6 months or so. I guess what I'm wondering here is have you felt constrained in TRUECORE and COLORBOND steel volumes over the last 12 months? And I guess what I'm really asking, is there a chance of a nonlinear ramp-up relative to the targets you put out on Slide 9?
Tania Archibald: Yes. The challenges that we've had have been going on for a while over the last couple of years, and it became extremely pronounced during the COVID period. And it really -- you actually need to almost break it down to construction week -- production weeks. And we have experienced periodic shortfalls in supply. And what it does is create a not great customer experience. And so we're very, very focused on making sure that we've got the volumes there as and when our customers need them. So it's more about addressing the periodic shortfalls that do occur that create frustration for our customers. But more broadly, we see good upside potential -- more than potential. We see the upside coming with continued growth in TRUECORE. Now we know that metal framing has grown across the Australian residential space. It's sitting just below 20%. We would have the lion's share of that. When you think about where it was 10 years ago, it was sub-10%. So we've made good inroads. I see no reason why we can't go significantly higher. I also see the opportunity with COLORBOND and continuing to grow there, not just in the roofing space but walling. One of the things that we didn't actually announce in this pack because it came slightly too late, but we've also just commissioned the new digital print capability down at Western Port in Victoria. And that's a very exciting addition to the portfolio, and we think that's probably going to play an important part in the residential space, including walling applications. So there's a lot of exciting stuff going on in terms of the growth more broadly of the metal coated product.
Scott Ryall: Okay. Great. And my second one, obviously, a few months ago, you pulled out of the Whyalla process in terms of -- well, pulled out -- obviously, you're not filling it. I guess what I'm wondering, you've got -- that has gone -- you're obviously ramping up your capital management activities, whether it's reactive or proactive. I'm not really looking for a view on that so much as could you just make sure -- just describe how you make sure you don't miss out on valuable medium-term investment opportunities in the context of trying to reward shareholders for, as you say, an extended period of CapEx?
Tania Archibald: Yes. Yes. I think there's probably 2 questions in there. So firstly, on Whyalla. We've -- the reason why we're primarily looking at Whyalla is because of the very high-grade magnetite ores that are sitting there and whether or not that provides an opportunity for Port Kembla down the track. We remain interested in it. The consortium remains firm. We did not progress into the current phase, but we're obviously sitting there with our right of last offer. We're watching the process with interest, but I've been very consistent that whatever it would absolutely have to make sense for shareholders. And if we can't get that to work, then we'll continue looking at other options. Now just in terms of the ramping up in capital management, we've been engaged in a very extensive investment program for quite a number of years now. And so that obviously puts a degree of constraint in terms of the shareholder returns. What we're seeing now is we've passed through peak CapEx. We've now got the benefit of the improved cash flows now and also coming through in the next couple of years. So it's a deliberate design to ramp up the shareholder returns. We're not constraining ongoing growth opportunities. I think David mentioned in a couple of his earlier comments that we generally set aside $100 million to $200 million for growth opportunities on an ongoing basis outside of the major projects. There are some ongoing opportunities that we have in North America. We're looking at some potential options around BlueScope Buildings. We've got some capital-light options setting up in Asia. And we've got some ongoing opportunity for growth in Australia, which is not necessarily CapEx related. It's more around how we continue to grow our market share. So I don't see that we're in any way compromising our ability to grow. It's really about resetting the balance between investment spend and reallocation of capital to -- or returns to shareholders.
Operator: Your next question comes from Keith Chau with MST Marquee.
Keith Chau: Tania, maybe a first question for you on capital structure and capital returns. Given that franking credits at the moment is not necessarily the most efficient way to return capital via special dividend. So the buyback, I think, has been extended to the end of August 2027 now. Just want to be clear, what are the factors that prevent BlueScope from buying back shares on market outside of corporate activity potentially going on in the background? Or a view on internal valuation. Is there something else that we should consider when assessing the prospects of that buyback being active?
Tania Archibald: Thanks, Keith. Look, the buyback is always an option. It's sitting there for us to use. The decision to go with the special dividend has a very simple premise. It is the most straightforward and clear way of delivering value directly to our shareholders. It's highly visible. And therefore, that's the basis that we've gone with for this particular half. We don't want to be accused of doing anything inappropriate. So obviously, the buyback was inactive for a period of time whilst that corporate activity played out in the year. But again, it's also reinforced to us the need to be very clear about the value that we are delivering to shareholders.
Keith Chau: Okay. And maybe a follow-up on to that, Tania. Is there anything at the moment that constrains you from reactivating that buyback?
Tania Archibald: No, there's nothing that would cause us to stop reactivating the buyback.
Keith Chau: Okay. And then second one, I know there have been quite a few questions been asked on blast furnace 6 transition and also MCL 7. Maybe just put it simplistically, when is MCL 7 expected to be fully commissioned and producing at capacity -- or sorry, producing at a level that you're happy with from an efficiency standpoint? And then the transition from blast furnace 6, how far into FY '28 could that persist?
Tania Archibald: So MCL 7, I think the fastest that we've actually done in terms of ramping up a metal coating line is about 3 months. It can take a bit longer. It can take 3, 4, 5 months. Having said that, I've been hugely impressed with the commissioning stats that we're seeing. I mean, this really is a state-of-the-art facility, but it is early days. So across this half, basically, and then we should be hitting our straps into the next half. In terms of the blast furnace 6 transition, so what will occur there is that in the next half, so in that January to June period, that's when we'll see the cutover from #5 to #6. We -- blast furnace 5, I think we mentioned blast furnace 5, which is the current operational blast furnace, is running extremely well for where it is in its campaign life. So we've actually got full flexibility in terms of the timing of the cutover. I would like it to be earlier in the half, but we just need to -- basically, we just need to do the cutover as and when we're ready. If the cutover was to sort of occur, if it looked like it was occurring at the end of December, for example, we would probably push it out into January just because it's important that the teams get a rest. They've obviously been at this project for a number of years now. It's a very large project. We've got around 800 people on site. So it's very complex. But I would think some point, early-ish in the next half is what we're targeting for the cutover. That cutover, by the way, will generally take about a month in terms of ramping down #5 and ramping up #6.
Keith Chau: Okay. And then the last one, maybe for David. There's been a lot of discussions on cost out today, but seemingly, the corporate cost guidance for the next half, at least, was higher than expectations. David, is there anything to call out on corporate costs that have ramped over the last period? And should we assume that the run rate for the first half of FY '27 is something that builds from next half onwards?
David Fallu: Yes. No. So primarily, the main piece there is the investment in property capability is sitting within that corporate number. So kind of like-for-like, it's actually a reduction in corporate costs, Keith. But primarily, what's sitting in there is effectively the build of property capability to drive the acceleration that Tania was referring to.
Tania Archibald: There's a little bit of tech spend in there as well. That change in the accounting standard obviously means that tech spend now goes from CapEx to OpEx. And because of the change in our functional operating model in the first instance, we've got a little bit of cost, I'm going to call it, $5 million to $10 million that's sitting in that corporate cost that will actually end up being reallocated out to the businesses. So just that functional model change has probably had a bit of an impact as well.
Keith Chau: Okay. So the go-forward level on a half yearly basis is whatever the guidance was for first half FY '27, less the $5 million to $10 million going back into the divisions?
David Fallu: That's right.
Tania Archibald: Again, depending on the level of property activity. Yes.
David Fallu: Yes. And probably just for complete clarity, Keith, we haven't incorporated any sort of property realizations in guidance, right? We'll do that if we're reasonably proximate.
Operator: Your next question comes from Paul Young with Goldman Sachs.
Paul Young: First question, just to reflect on, I guess, the last 6 months and the approach from Steel Dynamics and also 7. And looking at your response and today with the announcement of $3 planned on of capital returns for next year, David, can I just look at the moving parts around your forecast operating cash flow for next calendar year, you forecast CapEx and looking at effectively what the implied free cash flow is, I mean, is it basically the $3 imply that you're going to pay out around 100% of free cash flow when you look at your scenarios?
David Fallu: Yes. So in terms of CapEx for next year, we've -- effectively, that's just over $1 billion, which largely reflects some of the delay and increase from the major projects flowing into FY '27. A bit over $600 million of that is expected in the first half of FY '27. Ultimately, as I said, we will have a minimum of 75% of cash flow going back to shareholders. So ultimately, that kind of sense the base. And depending on how we're seeing the sort of outlook more broadly, we'll take a view as to whether we sort of increase that level.
Paul Young: Okay. And then a question maybe for you, Tania, just when you look at the portfolio and again, your response to -- from that approach and you're doing everything you can on the cost, that cost out is not easy. I think the $150 million represents circa 3% of your $5 billion annual cost base when you exclude raw materials, but that program is going quite well. If you look at the noncore assets you sold, you sold India for a decent price above relative to book value. When you look at the portfolio, is there anything in the portfolio that you look at and go, well, there's ongoing opportunities to monetize. And maybe calling out, for example, China, where the carrying value halves and it sort of underperformed in the period or anything in the U.S. with respect to BlueScope properties. And just stepping back, when you look at the portfolio, is there anything that you look at and go, well, we continue to see in addition to cost down opportunity to unlock value for shareholders?
Tania Archibald: Yes. It's a good question, Paul. It's something that we engage on a very -- on a regular basis. And obviously, the India example is the most prominent one. We have already wound down the properties business in the U.S. So we've released pretty much now all of the cash flows. There's one project to go, I'm sorry, in the BlueScope Properties Group in the U.S. When I look across the portfolio, I -- at the moment, I see a strategic rationale for all of the assets in the portfolio. What I've been particularly impressed with, I think the real gem of this year's performance has actually been our Southeast Asian business. Often, we get questions around the value of that business. And I think the efforts that we've been putting into that business over the decades are now finally starting to shine through. And I think it's got a big role to play in the portfolio going forward. The China business is an interesting one. It's an intensely competitive market. It's a very weak macro environment. There's a lot of very exciting things going on in China. It's extremely innovative. There's a lot of IP sitting in China. We think it's a good business to have. It's obviously impacted in the last half with the cyclical impacts. I mean it is quite extreme in China in terms of the seasonality, I should say. We still think it's a good business. We think there's a lot of upside to be had with that business. So we're very keen to retain that business. And I think more broadly, when I look at the U.S., again, the ambition with the BCP business remains absolutely undiminished. Again, we are 2 years behind where we wanted to be, but we see a very large market that we think that we can adapt to have a value proposition that will look a little bit different to Australia, will look a little bit different to New Zealand. It will look different to what we do in Asia. It will be adapted for that environment, but we see -- we believe that there is significant upside opportunity there. So we're very comfortable with the set of assets that we have. I think I'd earlier called out the performance of the pre-engineered buildings business in the U.S. It's been performing at a very strong level. They've put a lot of time and attention into how they manage their backlog and their margins. They've got a good, healthy market that they're dealing with. So we're very comfortable with the portfolio as it currently stands.
Paul Young: Yes, that's clear, Tania. Can I then ask just a quick comment on Australian demand at the moment? I mean volumes were good in the half. Throughput volumes were good. I'm hearing about a COLORBOND price increase possibly flowing through in the December half. A&A volumes and just work on hand across the industry is strong exiting the half. And then we've got obviously the uncertainty around the new Australian government policy with respect to negative gearing in housing. Your sales teams generally have a sort of 1- to 3-month sort of view on order books on COLORBOND here domestically. What are they seeing on the ground, particularly in the last couple of months?
Tania Archibald: Yes. Good, healthy, solid demand. It's been quite resilient, probably more than expected. I think the approvals have continued to trend upwards. I think what we do see, Paul, is a bit of a 2-speed economy in the sense that Queensland and WA are performing very, very strongly. Melbourne and Sydney are a little bit more challenged, but I think that provides us upside opportunity in terms of the growth that we're going to see there. When I look more broadly, industrial commercial is also quite positive. I think the outlook for infrastructure is also quite positive. There's a bit of strength in demand actually coming from data centers. Now this one, we find it difficult to quantify, but we do know that there's COLORBOND going in as roofing and walling part of insulated metal panels. We also know there's lot of beams going in there. So we see there's reasonable strength in demand. What we also see in the distribution channel is a fair degree of resilience. I don't think customers are sitting on a lot of inventory. I think they're buying very cautiously. But I think we've been impressed with the way that underlying demand has actually held up. In terms of the government changes, I find it an interesting one. I mean I'm sure it will have some positive impact. But at the end of the day, it doesn't really alleviate the supply problem. And what really needs to happen here is we need the land to be freed up, the approvals to occur. We need the infrastructure to be put in place. Trade availability is a critical issue. And I think until we address what sits at the fundamental heart of supply, I think it's going to be a little bit of a challenge. I mean at the end of the day, we've got a structural shortfall in housing. And the more that we can do on the supply side levers, the better we will be.
David Fallu: Maybe another point to add, Paul, is obviously, we've got a reasonable exposure to A&A and those budget changes really don't have an impact in that space.
Paul Young: Yes. I notice that line is trending up. Okay. That's all positive.
Operator: The next question comes from Chen Jiang with Bank of America. .
Chen Jiang: Some of my questions have been asked. Just a few follow-ups, if I can. Firstly, on the Australia business, you mentioned the demand is strong in Australia, but in contrast, the Asia steel spread remains subdued and actually the spot spread has been declining and China net steel exports remain elevated to the rest of countries. So I'm just wondering for the TRUECORE and the COLORBOND volume growth, is that demand or strong demand across all of your steel products or just for the and COLORBOND like value-added products. I guess I'm just trying to understand the volume growth in the TRUECORE and the value-added. Is that driven by the demand -- strong demand in Australia or driven by like you are growing the market share like you mentioned over your competitors? I have a few after this.
Tania Archibald: Yes, it's a good question, Chen. Look, I would say that we have absolutely been growing share in TRUECORE and COLORBOND. But I think we've been -- the demand is reasonably strong across all of our steel products. I don't think there's any areas of particular weakness that we would see. But certainly, some of the added strength that we would see in TRUECORE and CORBOND would be around that share growth. And it goes again to the strategy that we've been driving for many years now, which is make sure we grow the domestic market, make sure we grow the value-add component of the domestic market, make sure that we have a quality product, a premium branded product that we support through the channel, including pulling through the end demand by the work that we do in marketing, advertising, et cetera. So there's a big, extensive program that sits behind all of that.
Chen Jiang: Sure. Is that across all your products? Or just for the TRUECORE and COLORBOND, you have strong demand?
Tania Archibald: So demand is reasonably solid across all products, all product segments. There's no particular areas of weakness that we're seeing.
Chen Jiang: Okay. Right. Got it. That's good to know. And then for the blast furnace transition to your newly relined blast furnace 6, I know a lot of questions have been asked. But I was wondering how long is the transition period? I understand you mentioned the cutover is next half and then about a month to move to blast furnace 6. I'm just wondering, generally speaking, I mean, you haven't done -- I mean, BlueScope haven't done blast furnace transition for a while. So are you expecting any volume impact and -- as well as cost for -- are you running 2 blast furnaces at the same time until your newly relined is running smoothly? How should we think about that beyond the first half FY '27?
Tania Archibald: Yes. No, it's a good question. So I think the last time we did a reline was back in 2009, and that was when we had a 2 blast furnace situation. And so back then, what you have to do is go like mad and reline the furnace at pace because you're obviously out of -- you're not producing and you obviously need that volume. Now since that time, we've shut down one of the blast furnaces. So blast furnace 6 has actually been sitting there as a mothballed blast furnace, which we've sort of kept carefully under wraps. And it's that blast furnace and the broader precinct around blast furnace 6 that we've been doing all of the upgrade work on. So this is -- to be fair, it's not just relining the blast furnace itself -- the furnace proper. There is a huge amount of work that's been going into the whole infrastructure that sits around that facility. We can no longer run dual blast furnaces for any extended period of time. We simply don't have the infrastructure in place to do that. So what we've been doing -- we'll be doing is building stock ahead of the transition. And so that's some of the disruptions that you'll sort of see being impacted in the numbers right now. So we build stock, and then we will basically take down -- we'll run down #5 blast furnace. We'll ramp up #6. That will occur over the space about a month, all being well. And then we'll basically just do the full cutover and #5 will then become mothballed.
Chen Jiang: Right. And that is going to happen in second half FY '27, like how you are going to wind down blast furnace 5 and then ramping up blast furnace 6? And I guess that 1 month gives you enough time to commission BF6 from an engineering perspective smoothly.
Tania Archibald: Yes, yes, yes. So they'll do all of the prework that they can, and then they'll basically blow in the new -- the relined blast furnace. Hopefully, it will occur early in the half, although there's a lot of moving parts. So what we'll do in November at the AGM is we'll give an update then as to the timetable. We'll have a much clearer view then on the exact timetable for the transition.
Chen Jiang: That will be helpful. Can I squeeze in last question about your U.S. business, the BCP. BCP guided 1/3 higher, just on a high level -- 1/3 higher than the second half. Just on a high level, I'm wondering how much is due to your turnaround strategy? Are you gaining market share in volume? And how much is due to better demand in U.S.? Well, you mentioned a couple of times that the demand is solid in U.S., which probably led to better coating pricing or coating margin. I'm just trying to think how you think about your turnaround strategy to continue? Or it's just overall, the industry, the U.S. steel industry is sorted?
Tania Archibald: Just to be clear, so the reporting segment and the outlook segment is for BCPNA. It's not just BCP. So there's 3 businesses that sit within that. And there's a broadly equal uplift across each component of those businesses. So that includes the buildings business, BlueScope Buildings, so Butler and Varco Pruden. It's the Steelscape business, Steelscape ASC that sits on the West Coast and the BCP business. And the BCP business, that's much more around operational improvements in the business. It's not off the back of growing market share. It's fundamentally improving the performance of the underlying assets.
Operator: Your next question comes from Brook Campbell-Crawford with Barrenjoey.
Brook Campbell-Crawford: Just on the U.S. pricing environment, you talked about fixed price contracts, which is helpful. But just on the shorter term and almost spot volume, I guess, seems that are on a 1-month lag. How are you seeing the sort of discounts to the benchmarks playing out? Is it tightening up through the course of this year and at the moment, just given, I guess, service center is pretty low and lead times are sort of ticking up a bit. Any commentary around that would be good.
Tania Archibald: Thanks, Brook. What I'd say is it's stable. It's in line with longer-term history. I think the discounts elevate during uncertain times, but there's nothing really uncertain around the current strong prices. So I would say relatively stable, Brook.
Brook Campbell-Crawford: Okay. That's helpful. And Tania, maybe just a follow-up. You mentioned earlier on some options for growth in the U.S. buildings business and in Asia capacity as well. You mentioned that in response to another analyst's question. Do you mind just providing a little bit of color on a few of those would be good.
Tania Archibald: We just think there's some relatively low capital options to free up a bit more capacity and get some more throughput through our facilities in North America at buildings. So we're actively looking at some options there. When I look at Asia, when I look at the performance of those businesses there, we've actually got one metal coating line that's mothballed, another one that's reasonably inactive. It wouldn't take much effort to restart those metal coating lines. We've also got some in-line painting capability that we're thinking about doing some modifications to. And again, that gives us some relatively low capital opportunities to continue to grow that business. So again, I think that business where we've got a fantastic position across every major Southeast Asian economy. We've been at it for decades. We understand what it takes to be successful there. And all of those items that I mentioned, they're all within that capital envelope that David mentioned.
Operator: There are no further questions at this time. I'll now hand back to Tania Archibald for closing remarks.
Tania Archibald: Thank you, everyone, for joining us today. I know you've got very busy days, and we look forward to catching up with you all individually over the coming week.