SYDNEY - [AAP] BlueScope Steel (ASX: BSL) shares have lifted above $15 for the first time in nearly eight years after the company raised its forecast for first-half underlying earnings and flagged gains from the cut in the US company tax rate.

Australia's largest steelmaking business now expects underlying earnings for the six months to December 31 will be around $460 million, up $40 million on its previous estimate in August.

Shares in the company peaked at $15.73 after the news, their highest level since January 2010. By 1230 AEDT, the stock was trading at $15.35, still up six per cent.

The guidance increase is mainly on account of higher steel prices and volumes in the local market, a $20 million lift in contribution from export coke and improved productivity, BlueScope said.

It will also recognise $12 million of previously impaired tax assets at its Indian joint venture Tata BlueScope Steel.

However, the gains will be partly offset by lower volumes, mix and margins at the southeast Asian buildings and coated & building products businesses, incoming managing director Mark Vassella said.

"Current steel market macro-conditions are positive. However, we are seeing rising raw material costs and continued competition from imports," he said in a statement on Thursday.

The company previously has warned that escalating energy costs are weighing on growth, saying its electricity bill will have nearly doubled over the two years to June 2018, while gas expenses would have increased by a third over the same period.

On Thursday, however, the company had further good news, saying the passing of tax reform in the US would lower the tax rate for its extensive operations in the country.

The Republican-controlled US House of Representatives gave final approval to a sweeping tax bill that includes cutting the company tax rate from 35 per cent to 21 per cent in the largest overhaul of the US tax code in more than 30 years.

President Donald Trump is expected to sign the bill into law as early as this week.

BlueScope said the tax change, which is set to start on January 1, will result in a seven per cent decrease in federal tax on its US earnings in FY2018 and 11 per cent in subsequent years.

The benefit will be partly offset by a toll charge on foreign earnings but this is not expected to be material, it said.

Citi analysts have kept a "Buy" rating on the stock with a target price of $15.46.

 

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