The Australian Steel Institute (ASI), Australia’s peak steel body, is calling on state and federal governments to support local steel fabricators and manufacturers, arguing the local industry is being “seriously undercut by a glut of cheap imports”.
The Institute’s survey of steel fabricators in July revealed 86% had reduced profit margins due to the impact of cheaper imported fabricated steel, which is 15% to 50% lower than local prices.
ASI chief executive Mark Cain says the impacted businesses were reporting loss of viability due to decreased profit margin, loss of revenue due to lower volumes and capacity utilisation, and increased costs.
“The ASI is engaging with state and federal governments in order to bring this problem to their attention, explain the damage that is being done to strategically important local industries and to identify what courses of action are available to provide relief to members," Cain said.
Is government intervention required?
The ASI points to several complaints around imported steel being investigated by the Anti-Dumping Commission as evidence that foreign companies are using subsidies and dumping of goods as a means to gain market share.
The peak body believes international trade rules are being violated within the industry, making the market unviable for local businesses, particularly on the east coast.
“We estimate that over the past 18 months, there has been almost $300 million worth of steel being imported from overseas into Sydney alone,” a NSW-based steel fabrication manager told the ASI.
“This is money going offshore and directly affecting the Australian market and local jobs. The downturn in local work not only affects our business but the steel industry as a whole and it is disheartening to see the repercussions, especially for our dedicated workshop team.”
$200 million to future-proof industry
In January this year, the Federal Government pledged $200 million to support two projects in the Australian steelmaking industry.
The press release notes the increase in steel demand from the energy transition, estimating 5 billion tonnes of green steel will be needed between 2022 and 2050.
The funding went directly to two companies in particular; $136.8 million to BlueScope to support the No. 6 Blast Furnace reline and upgrade project at the Port Kembla Steelworks in NSW and $63.2 million for LIBERTY Steel in Whyalla for the purchase and installation of an electric arc furnace.
The government claims the funding will “help maintain domestic steelmaking capability and support the Illawarra and Upper Spencer Gulf regions during the net zero transformation”.
If the ASI’s claims are valid, a much higher level of support may be necessary to build-out and maintain Australia’s future green steel sector.