Donald Trump wants to re-shape the world in his own image: and this time he´s not going to pussy-foot around. His decision-making over the next four years won´t be restrained by the fear of electoral consequences – because the constitution prevents him from seeking a third term as President. In the short time since his election victory, Trump´s bold statements and controversial political appointments suggest he is willing to throw a lighted match into the fireworks box of world trade. China was the principal target during Trump´s first term in office when he implemented Section 232 tariffs of 25% on steel imports into the US and 10% on aluminium imports. Trump has again vowed to impose tariffs of 10-20% on all imports into the US, and up to 60% on those from China. The health of the Chinese steel industry is of crucial importance to the domestic steel industries of all countries around the world. As events during 2024 have shown, when Chinese steelmakers encounter weak domestic demand for their product (as they have), they turn increasingly to international markets to offload their surplus steel – at reduced rates. This often renders unprofitable many of the locally-produced steel products in those markets.

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In the period January to October this year, Chinese steel exports were 23% higher than the equivalent period last year. If Trump´s tariffs cause any further weakening of China´s economy, the country´s domestic demand for steel will fall even more, leading to yet more Chinese steel being exported. The problem isn´t so much the amount of direct steel exports from China to the US, which represent less than 1% of China´s overall steel exports. The greater problem for steelmakers in China is that tariffs will reduce the flow of so-called “indirect steel” products from China to the US. Indirect steel products are those with large amounts of steel in them: such as cars, trucks, engineering machinery, home appliances, containers and elevators.

Last week, on the sidelines of the Asia-Pacific Economic Cooperation summit in Peru, the Chinese leader, Xi Jinping, met with the outgoing US President, Joe Biden. Xi said: “China is ready to work with the new US administration to maintain communication, expand cooperation and manage differences.” However, Xi will encounter an emboldened Donald Trump. On the campaign trail, Trump spoke of a “Reciprocal Trade Act”, which would allow reciprocal tariffs to be applied to any country’s tariffs on US exports. In a further sign of his America-first mood, Trump also said he would block the Nippon Steel takeover of US Steel. And, as the US prepares to withdraw from the Paris Climate agreement, Trump has promised to increase US production of fossil fuels. So, get ready China. Difficult times are coming.

The Whyalla steelworks was opened in 1941 and has been supplying steel products to businesses all over Australia ever since. Steel from Whyalla has been used in the construction of scores of commercial and Royal Australian Navy vessels down the decades. The steelworks is a vital part of the steel products supply chain in Australia and is our country´s only manufacturer of rail. In recent months, Australian Steel News (ASN) has focussed attention on developments at Whyalla because not only do the people of Whyalla depend on the steelworks running smoothly and being profitable – so too do many businesses in the Australian steel industry.

The steelworks are part of Liberty Primary Metals Australia, which itself is a subsidiary of GFG Alliance, a global conglomerate of businesses owned privately by the Gupta family and overseen by the UK businessman, Sanjeev Gupta. In Australia, names such as InfraBuild, ARC Reo, Austube Mills, Emrails, InfraBuild Recycling and Midalia Steel all ultimately belong to GFG Alliance.

In the latest Whyalla development, the Australian Financial Review reported last week that four industrial supply companies from Sydney and Newcastle which are owed a combined $684,000 have issued fresh default notices to companies owned by Sanjeev Gupta’s GFG Alliance for unpaid bills related to the steelworks. As ASN has reported, Mr Gupta recently admitted to ABC News that his Whyalla business is no longer profitable. In August, 48 people at the steelworks lost their jobs; and there are reports of many contractors and suppliers not being paid until heavy pressure is brought to bear. In September, the South Australian government sought advice on its options, should the steelworks or its parent company, Liberty Primary Metals Australia, go into administration. In late October, news emerged from the transport group, Aurizon, which has a contract to transport millions of tonnes of iron ore each year from Mr Gupta’s mines in the Middleback Ranges to the nearby port and the Whyalla steelworks. A spokesperson for Aurizon said: “Aurizon is in discussions with one of our customers regarding unresolved contractual issues. We have endeavoured to find a suitable way forward. However, Aurizon has suspended some rail haulage services to the customer until these issues are resolved.” The `issues´ are believed to be unpaid bills and, at the time of publishing, the rail suspension remained in place. However, the biggest of Mr Gupta´s problems at Whyalla is that the blast furnace went offline almost 10 weeks ago. On October 25, Mr Gupta assured ABC News that the blast furnace would be back up and running “in days or weeks, not months”. It´s still offline.

To other news. During and shortly after the Covid pandemic, when global supply chains were in chaos, delays in the delivery of steel or simply the unavailability of some types of steel caused expensive hold-ups to construction activities all around the nation. It now seems the pandemic wasn´t the only cause of the problem. Master Builders Australia has drawn attention to Australian Bureau of Statistics data showing build times for detached homes and apartments. The report says 15 years ago it took on average nine months to build a stand-a-alone house. It now takes 12.7 months – an increase of more than 40%. The time for an apartment building to go from approval to completion has risen from an average of 18.5 months to 33.3 months – an increase of 80%. These delays have cost blow-out consequences for the steel provided to such works. Master Builders Australia CEO, Denita Wawn, says: “There are a range of contributing factors including labour shortages, declining productivity, union pattern agreements, supply chain disruptions, complex regulatory requirements, occupational certificate backlogs and critical infrastructure delays. As a result, we’ve seen productivity decline by 18% over the last decade.” Master Builders Australia is calling for action to address inefficiencies in the construction process. It says streamlining regulatory approval processes, encouraging adoption of digital solutions, introducing incentives to grow the workforce through domestic and international means, and strengthening the domestic supply chain would be useful first steps.