The Australian market is being buffeted by winds from varying directions, with a resultant upward pressure on steel prices. Indeed, a glance at our graphs reveals the trend may have already begun. In the past two weeks alone, the cost of China rebar has risen by 3.8% in AUD terms. Likewise, Turkey rebar is up 3.7% in AUD terms. All our indicated scrap metal prices are also on the rise. Similarly, in the Steel Raw Materials graph, our unique Steel Feedstock Index has risen 10% from 481 to 530 in the past fortnight. In fact, across the board of steels and their ingredients, it now looks as though the low-point of the price trough was July/August. Two of the key drivers for the price increases are coking coal and iron ore. The price of the former has risen from $251 m/t to $308 in the past month. Meanwhile, iron ore is now at a five-month high of $122 m/t having gone up by 17% from its mid-August value of $104. The rally has been driven by some signs that China’s beleaguered property sector may be starting to turn around, with new bank loans surging in August to 1.36 trillion yuan, nearly quadrupling July’s 345.9 billion yuan. In tandem, the need for Chinese mills to rebuild their inventories has led to robust import volumes   

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of iron ore. According to customs data, the country imported 106.42 million m/t tons of the vital steelmaking ingredient in August, the most since October 2020. And most of it from Australia. Whether or not this year´s proposed cap on crude steel production in China puts a dampener on the surge remains to be seen. Production in the first seven months of the year is already well above a rate consistent with not exceeding the 2022 production level. However, it´s rumoured the Chinese central government may relax its own cap mandate in order to maintain economic activity.

Climate concerns may also put upward pressure on prices – both in the short and long term – depending on crucial policy decisions soon to be made at a federal government level. Climate Change Minister, Chris Bowen, has announced that the government will look to develop a so-called carbon border adjustment mechanism (CBAM), similar to what the European Union is about to implement. By any other name, a border adjustment mechanism is a tax. It is designed to shield domestic manufacturers, who are subject to the Australian government’s emissions rules, from competition from imports from countries with less stringent climate policies. Manufacturers have largely welcomed the move; however, David Buchanan, chief executive of the Australian Steel Association, takes a different approach. He says that while the steel industry fully supports the green steel revolution, many importers into Australia are already making “significant capital investments” into decarbonising their production. He says that any failure to calibrate a future potential carbon border adjustment mechanism could drive up the cost of imported products critical to the building industry and other sectors in the Australian economy. More than two million m/t of steel are imported into Australia each year. Mr Buchanan points out that many of those grades, sizes and sections need to be imported because they are no longer produced in Australia.

Special Note. As part of ASN´s new look, you will be receiving two editions of the newsletter each month from now on. Both free and both directly to your inbox. The “standard” ASN will be published in the first week of each month. The “light” version (the one you are reading right now) will be sent out in the third week of each month. As you have no doubt noticed, the light version has all the same pricing data found in the larger, standard version. However, the light version doesn´t carry: an international steel market summary; New Zealand News; Stainless Steel market summary; nor the Industry Insider column. Those elements will all return for next month´s standard version of ASN in the first week of October. We hope the ability to check up on prices during the middle of the month is of benefit and interest to you. Please feel free to contact ASN with any suggestions for the further improvement of our newsletter.