The Australian Steel Institute (ASI) says it´s working with state and federal governments to support Australian steel fabricators and manufacturers who have been undercut by a surge in low-priced, imported fabricated steel. The action comes on the back of a 2024 survey by the ASI which revealed 86% of local fabricators and manufacturers have seen reduced profit margins as a result of imported fabricated steel being priced at 15 – 50% lower than the local offer. “The extent of the price undercutting is reflective of subsidies being offered by the country of origin and/or dumping of product brought on by a slowdown in the economy of the producing nation,” Mark Cain, CEO of the ASI told Australian Steel News. “The use of subsidies and the dumping of goods to gain market share is unfair and breaches international trade rules. Consequently, local Australian businesses are not able to viably compete with overseas exporters who either benefit from subsidies or who marginally price their surplus production to flood export markets,” he added. Mr Cain said the issue is particularly impacting fabrication businesses on the east coast of Australia which are reliant on the portal frame market for structural steel.

The impacted businesses have been reporting a loss of viability due to decreased profit margin, loss of revenue due to lower volumes and capacity utilisation, and increased costs. Mr Cain said nearly half of those surveyed are undertaking some form of restructuring in an attempt to remain viable.

“The brunt of the problem is being born by small- and medium-sized businesses, each typically employing 20 – 200 Australians, and providing skilled employment in their local region,” said Mr Cain. “Approximately 80% of those surveyed reported they are now operating at less than 80% capacity utilisation, which is typically a benchmark for breakeven profitability in manufacturing,” he added. At the extremely distressed end of the response, one fifth of businesses said they are operating at below 50% of production capacity. Mr Cain said the survey validated reports provided to the ASI by individual member businesses over the past 12 months. Members have had to lay off long-term, skilled staff members to remain viable due to greatly diminished orders. The general manager of a long-established NSW steel fabrication business which contacted the ASI as part of the survey said: “We estimate that over the past 18 months there has been almost $300 million worth of steel imported from overseas into Sydney alone. This is money going offshore and directly affecting the Australian market and local jobs”. Mr Cain said the ASI will continue to explain to state and federal governments the damage being done to strategically important local industries, and to identify what courses of action are available to provide relief to members.

Meanwhile, the administrator of the Whyalla Steelworks, KordaMentha, has given an update to creditors and workers at the site. Sebastian Hams of KordaMentha said in a statement that $100 million had been spent thus far on restoring inventory, sustaining capital expenditure and improving the site’s safety. Mr Hams said the blast furnace at Whyalla is now operating at its full capacity of 2,800 tonnes a day. He said this means it is now running in a stable environment, though its life span remains uncertain. Mr Hams wouldn´t reveal how much the steelworks is continuing to lose on a daily basis, but he said it is significantly less than the $1.5 million a day it was losing before going into administration. He confirmed that site visits from prospective buyers were underway, while admitting it remained to be seen how any prospective buyer might deal with the age and condition of the Whyalla Steelworks. “The new buyer will come in with new technology and a different mindset, so it’s entirely dependent on what a new buyer wants to do,” Mr Hams said.

One of the hurdles to attracting a buyer is the unresolved question of who actually owns the Whyalla port. KordaMentha claims that OneSteel Manufacturing, the owner of the Whyalla Steelworks, is also the legal owner of the port facility. The port and its operations are thus part of the administration process and will be a vital element in the overall Whyalla Steelworks entity that KordaMentha is preparing for sale. The port and the steelworks having the same owner is far more attractive to a prospective buyer than the port being owned by someone else. “The sale process cannot commence until the port issues are resolved,” the administrator told the Federal Court earlier this year.

The sticking point is that GFG Alliance claims the port facility belongs to one of its subsidiaries, a company called Whyalla Ports Pty Ltd. GFG says a lease was legally given to Whyalla Ports Pty Ltd by OneSteel Manufacturing, which is also a GFG subsidiary. GFG Alliance argues, therefore, that the port facility is entirely independent of the OneSteel Manufacturing administration process. To recap: the British industrialist Sanjeev Gupta owns GFG Alliance which was the owner of OneSteel Manufacturing until it went into administration in February. Clearly, Mr Gupta wants to hang onto the port, and believes he has a right to do so.

The South Australian Government has now stepped into the dispute by making amendments to the Whyalla Steelworks Act 1958. The Premier, Peter Malinauskas, told Parliament on May 13 that the existing legislation stipulates the consent of the Minister for Energy and Mining is necessary for the enactment of any lease, such as the alleged one between OneSteel Manufacturing and Whyalla Ports Pty Ltd. He said consent had not been applied for in relation to the purported lease. “The bill has been drafted out of an abundance of caution to clarify the effect of the failure to obtain prior consent, and to make it clear that the purported lease agreement granted by OneSteel Manufacturing to Whyalla Ports never had legal effect from the beginning,” Mr Malinauskas said. The Whyalla port is therefore still owned by OneSteel Manufacturing and is thus included in the administration process, according to the Premier. A spokesperson for GFG Alliance said the port ownership issue was “a matter for the court to decide and we will respect its decision”.