October 6, 2023

Steel Market Summary - Australia

Steel Industry Heartened By The Need For Housing

The fundamental strength of the Australian economy allowed it to come through the pandemic and the supply chain crisis in reasonably good shape. Likewise, the current cycle of interest rate increases has not (yet) had a catastrophic impact. In part, large government infrastructure projects currently underway and those planned for the future have ensured a continued and strong demand for steel products. Now, figures from the Australian Bureau of Statistics (ABS) suggest the housing sector will soon do its bit to support the economy and the steel industry. First, house prices remain buoyant: meaning there is plenty of money swirling around. Next, the ABS reports the total number of dwellings approved in August rose by 7.0% in seasonally adjusted terms following a 7.4% fall in July. That´s encouraging. Further, Australia´s annual population growth of 591,000 continues to well outpace the annual dwelling approval growth of only 170,000. What does this mean? Well, the fact that housing prices have largely recovered in many cities to close to the record highs of just 18 months ago and that dwelling approvals have bounced back is good news. Meanwhile, Australia´s immigration-boosted, annual population growth substantially


outpaces the number of homes being built. If mortgage rates do not increase, or indeed start to fall as some banks are forecasting, there is the possibility for a resurgent housing market. This would certainly encourage builders to get building in advance. All of which is welcome news for people supplying steel to the Australian construction market.

So, whilst the demand outlook in most of the developed world remains weak, the infrastructure projects here in Australia are keeping things afloat. Domestic steel is still being mostly consumed domestically by the appointed distribution network. As for imported steel, it´s true to say that even with scrap prices remaining stable there are some bargains to be found, as a result of weak overseas demand.

In other news, BlueScope Steel has announced it will appeal an order made against it by the Federal Court. In August, the steelmaker was ordered to pay $57.7 million for attempting to fix prices for flat steel products supplies in the country between September 2013 and June 2014. The order came after the Federal Court last December ruled in favour of the ACCC (Australian Competition and Consumer Commission) which brought a case against BlueScope Steel for alleged cartel conduct in the supply of flat steel products. BlueScope Steel has declined to comment further.

Finally, if you look to the top of the this page, you´ll recognise that you´re on the website AustralianSteel.com. On the menu toolbar, if you click on Special Features there is a drop-down menu revealing: Scrap Metal. This style of directory will be a recurrent feature on the website as we create promotional space for the many and varied sub sectors within the steel industry. This month´s scrap metal directory is only small – it´s our first, after all – but the more the concept grows the more value it will be to readers and businesses alike. Next month: wire products.