Shares in steel producer BlueScope surged Tuesday with sentiment buoyed by a big hike to its profit forecast thanks to stronger than expected steel prices.

The steelmaker said it now expects to post a pretax profit of around $600 million for the December half, which lifted its share price 8.1 per cent to $11.22.5c by late in the morning session.

Ahead of the upgrade, some analysts had pencilled in a price of more than $11 a share for Bluescope script, amid both optimism for the outlook for steel prices and also management's efforts to lift productivity.

As recently as November, the company said the pretax profit would be "at least $510 million" with sentiment at that time buoyed by the election of Donald Trump as the incoming US President which was expected to see a lift in infrastructure spending in that market.

Along with higher steel prices, the big uplift in the rice of iron ore has given its New Zealand iron sands unit a fillip.

"Our building products segment has had a strong half particularly in the North American business which benefited from higher steel prices and margins," the company said. "The India business also saw positive earnings growth with higher margins and volumes."

By division, the Australian steel products unit's pretax profit is running at around $240 million, North Star in the US $210 million; building products in ASEAN, North America and India, $110 million, the domestic building products arm around $50 million with New Zealand and Pacific Steel contributing $40 million, it said.

Ahead of the upgrade, Goldman Sachs was among the most bullish brokers on the outlook for Bluescope, with a 12-month share price target of $11.53, based on a pretax profit forecast for the half of $568 million. It revised its forecasts earlier this month, based on stronger steel prices along with the decline in coking coal prices in the latter part of the December half.