January 6, 2025

Steel Market Summary - Australia

Where To Whyalla And Australian Steel In 2025?

On Christmas Eve, when the South Australian premier, Peter Malinauskas, declared to the assembled media that it would be a “national disaster” if the Whyalla steelworks were to close, he was in effect speaking directly to Sanjeev Gupta, the British billionaire whose private company, GFG Alliance, owns the steelworks. “It (the closure) simply cannot be allowed to happen,” Malinauskas told reporters. “What workers at the Whyalla steelworks should have confidence in, is that I do not believe this nation wants to see steelmaking capacity lost,” he said. Such provocatively downbeat words as “disaster” and “lost” were used intentionally to increase the pressure on Mr Gupta to quickly find a solution to the Whyalla problem. The most pressing issue is that no steel is being made at the steelworks, after its blast furnace went offline in September last year and remains so. (At the time of publishing, ASN has yet to see any news of a resumption of operations). Following Mr Malinauskas´s Christmas Eve remarks, a GFG Alliance spokesperson said: “We are on track for a resumption of steelmaking soon.” However, it was back in October that Sanjeev Gupta told the ABC that steelmaking would resume “in days or weeks,

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not months”. And yet, here we are. In his comments to the media, Mr Malinauskas also emphasised the importance of the steelworks to the people of Whyalla and South Australia, and the nation overall. “Everything we build, every high-rise tower, every bridge, every structure with reinforced concrete, all contain rebar steel. The only place in this country that’s capable of producing the key ingredients for rebar, domestically, is the Whyalla steelworks,” he said. Mr Malinauskas warned the closure of Whyalla would leave Australia’s construction industry dependent on imports.

Job losses at the steelworks and contractors only being paid after lengthy delays also drew unwanted attention during 2024. In September, the situation had deteriorated to the point where the South Australian government thought it prudent to seek advice from insolvency experts on the possibility of the Whyalla steelworks business going into administration. At the time, a government bail-out was considered highly unlikely. On December 24, Mr Malinauskas´s seemed to confirm that position by saying: “There would be no point in making the government act too rashly, unless we were very clear about the consequences of our actions.” In addition to the blast furnace issue, Mr Gupta has repeatedly said that cheap steel from China has flooded the Australian and global steel markets, causing problems for pricing and production. Regrettably for Mr Gupta, that trend is likely to continue in 2025. The lack of domestic demand for steel in China, due to a sluggish economy and a collapse in the property market, shows no immediate signs of improving. To anyone concerned by the Whyalla situation, developments elsewhere in Mr Gupta´s empire will offer no comfort. Liberty Steel Continental Europe is a subsidiary of GFG Alliance. In late November, Liberty Steel’s Liège and Dudelange sites (in Belgium and Luxemboug respectively) were declared bankrupt. The Luxembourg Commercial Court delivered its ruling after the company failed to pay staff their October and November salaries. Meanwhile, another GFG subsidiary, Liberty Steel USA, has announced plans to temporarily shut its Peoria wire rod plant in Illinois and furlough the site’s workers. The company cited an influx of low-priced imports as the reason for the decision.

To other news, in its December 2024 update to members the Australian Steel Association (ASA) offered its expectations for 2025. David Buchanan, the ASA´s CEO said: “Steel producers and traders can expect a cautious recovery in demand in 2025, aligning with improved economic conditions.” Buchanan noted that inflation had declined to 2.8% and was now in line with the Reserve Bank of Australia’s (RBA) target range of 2–3%. This moderation suggests stabilising input costs for steel manufacturing. Also, although the RBA kept the cash rate at 4.35% at its December 2024 meeting, an expected rate cut at next month´s meeting will further assist business. Buchanan also pointed to the World Steel Association´s prediction that global steel demand will increase by 1.9% during this year. The recovery is likely to be driven by increased activity in the US, Japan and the European Union. The Australian steel market, which was valued at $19.38 billion in 2023, is projected to grow at a compound annual rate of 2.9%, potentially reaching $25.07 billion by 2032, according to the ASA.

Buchanan commented specifically on the anticipated steel consumption in Australia´s construction sector. In residential construction, he said lower interest rates are likely to boost housing affordability and mortgage availability, spurring a recovery in private sector house approvals. Increased multi-residential construction projects, such as apartments and urban housing, will drive demand for steel products such as reinforcing bars, structural steel and framing components. In the non-residential construction sector, Buchanan predicts renewed investment in commercial buildings, retail spaces and industrial facilities as businesses regain confidence and financing becomes less restrictive. As 2025 progresses, the Australian government´s $120 billion infrastructure pipeline will be of continuing benefit to the steel industry, according to Buchanan. Transport projects in the form of roadways, bridges and rail networks will require substantial quantities of structural steel and plate products. Meanwhile, renewable energy projects like solar farms, wind turbines and energy grids are highly steel-intensive.

With an eye to the future, Buchanan said the transition to electric vehicles (EVs) and their associated infrastructure presents a substantial opportunity for Australia’s steel industry. More than $500 million in federal funding has been allocated for EV infrastructure development. The rollout of national EV charging networks will require structural and fabricated steel for charging station housings, poles and grid connections. The renewable energy sector will also be a major growth area. Buchanan said the mounting structures and components of solar farms rely heavily on steel. Likewise, battery storage and grid upgrades will require advanced steel solutions.

It all sounds so positive. And with Donald Trump in the White House, what could possibly go wrong?

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