Australian Steel Institute chief executive, Mark Cain, warns cheap imported fabricated steel and the high cost of energy, particularly natural gas, is threatening the future of Australia’s steel industry.
The high cost of natural gas is an ongoing problem. The other problem is cheap imports which is why the ASI has joined Organisation for Economic Co-operation and Development (OECD) member countries around the world seeking trade action to combat unfair trading of steel and excess capacity.
It follows a flood of low-priced imported fabricated steel entering the Australian market in the past three years.
At the Paris meeting in March, the OECD Steel Committee warned the viability of even highly competitive steelmakers is threatened by excess capacity fuelled by Chinese cross border investments.
Chinese steel exports have more than doubled since 2020 to combat a downturn in China’s local economy, with excess capacity expected to reach 721 million metric tonnes by 2027. Without policy adjustments in countries that are fuelling the excess capacity, or disincentives for them to export their surplus steel, global steel industry problems will intensify.
The OECD has warned grants, tax incentives, differentiated electricity pricing and below-market borrowing to Chinese steel companies will trigger further unfair trade disruptions. Several OECD countries have already taken trade actions against Chinese imported steel, primarily through anti-dumping measures and tariffs.
They include the European Union, Canada, and the US. ASI research has revealed a rapid increase in fabricated steelwork imports in Australia over the past three years, with the 2024 volume representing an increase of nearly 50 per cent on the 2016 to 2021 period.
This had led to a large reduction in the availability of work for local fabricators.
At the ASI’s national convention in Sydney this week, Federal Minister for Industry Tim Ayres acknowledged the importance of local steel to Australia’s future. But he conceded the cost of energy, in particular natural gas, was a hurdle which is why the government will look at current settings.
ASI has called for an east coast gas reservation similar to WA to ensure gas and energy more broadly is affordable and competitive for domestic manufacturers.
Access to competitive gas supplies will also be critical to advancing the steel industry’s decarbonisation ambitions, with natural gas based Direct Reduced Iron (DRI) production having the potential to deliver a 60 per cent reduction in emissions.
Referring to the ASI’s Safeguard action to protect local fabricators from a surge in imported fabricated steel, Ayres said the government’s decision to shift responsibility for Safeguard from the Productivity Commission to the Anti-Dumping Commission reflected its desire to ensure a level playing field for the local industry. Safeguard actions temporarily protect local businesses from a surge in overseas imports.
In his presentation to the convention, Anti-Dumping Commissioner David Latina said he recognised import concerns.
Latina noted of the 60 existing anti-dumping actions in Australia, 45 were from the steel industry.
Latina welcomed the Anti-Dumping Commission taking over responsibility for Safeguard, saying it would make Australia’s trade remedies system more effective and align Australia with overseas countries.