There is enough encouraging data circulating in the steel world – and the world at large – to feel optimistic about 2024. True, the upward trend in steel prices is not generally welcomed, unless you are the seller. However, rising prices are at least an indicator of buoyancy in a sector. As our graphs show, October 2 was a low point in steel and commodity prices (which happened to coincide with a low point in the global stock markets). Since then, the price of iron ore, for example, has risen by 13.5% to US $134 m/t. This price surge is contributing handsomely to Australia´s post-pandemic budget repair. Having recorded the first budget surplus in 15 years in 2022/23, last week the Federal Treasurer, Jim Chalmers, projected a budget deficit of just $1.1 billion in the year to June 2024. Chalmers´s calculations assume iron ore will fall to $60 m/t in the period, whereas the Swiss investment bank UBS predicts it will remain above $100 m/t for the next two years. The strength of the iron ore price is attributable to the surprising resilience of China´s demand for the steelmaking ingredient. Despite having weak domestic steel demand over the past 12 months, due to a construction industry in crisis, China´s appetite for 

(Continuation)

making steel is undiminished. The country will likely make more steel this year than last. The prospect of government stimuli to revive the property market in China has quite possibly had an effect on the price of China rebar, which has gone up by 9% since October 2. Meantime, China´s steel exports in the January-November period of this year increased by 35.6% on last year. As our graphs also show, since the October lows the price of Turkey steel scrap has risen by 14% while Turkey rebar is up by 7.3%. The stellar performer has been HRC North America whose rise to $1210 m/t represents a jump of 60%. These increases are mirrored by global stock markets which have soared since the beginning of November on expectations that the world´s central banks have finished raising interest rates and that rate cuts will come next year. The fact the Reserve Bank of Australia held its cash rate target steady at its meeting earlier this month was in line with its counterparts elsewhere. All of which has contributed to an upbeat sentiment as we close out 2023.

Leaving price fluctuations aside, last week saw the publication of a report from Infrastructure Australia titled Infrastructure Market Capacity 2023. Infrastructure Australia is the nation´s independent advisor to governments, industry and the community on the investments and reforms needed to deliver better infrastructure. The entity´s chief executive, Adam Copp, said: “A clear message in this year’s report is that limited access to local steel and cement, as well as localised shortages of quarry products is contributing to price uncertainty in the supply chain, leading to delays and cost overruns.” Mr Copp also said steel imports are increasing because Australia’s steel production capacity cannot meet demand. He commented that in the fiscal years 2021 and 2022 steel imports had been 20% higher than the average of the previous two decades: and that this will likely grow in line with sustained construction demand over the forward estimates and beyond. The report warned that Australia has a shortfall of 229,000 public infrastructure workers. The report recommended the Australian Government, in partnership with state and territory governments, should undertake analysis of domestic steel production and fabrication capacity as part of broader Australian Government policy initiatives to strengthen and support sovereign supply chain capability and grow new capacity for future industries.

On a positive note elsewhere, the Minister for Defence Industry has announced the Australian Submarine Agency has entered into a contract with Australian steel manufacturer, Bisalloy Steels, for the qualification of Australian steel for use on Australia’s future SSN-AUKUS submarines. The comprehensive qualification process, involving more than 4,500 tests, is expected to be completed in the first half of 2025. Bisalloy Steels will perform the advanced heat treatment process on the raw plate steel to produce high-grade, submarine-pressure hull steel that meets or exceeds both the UK and US standards. The raw plate steel will be supplied by BlueScope Steel.

Finally, Australian Steel News will follow its usual publishing schedule over the holiday period through January. For those of you taking time off with family and friends, we wish you a happy break and we look forward to seeing you in 2024. As always, we welcome your feedback on the content of our newsletter.