The Steel has been taken out of the Steel Industry

6 Dec 11

Recent media about the fate of Australia's steel industy has come to the fore with the majors declaring substantial losses.

BlueScope Steel has reported a year over year loss of some $918 million and One Steel's steel segment has reported a $193 million year over year loss.

Similar to the manufacturing sector and partly because of weakness in the manufacturing sector, domestic demand for Australian steel is weak. Other major impacts on weak demand for steel are a subdued construction sector, foreign competition from imports, a strong Australian dollar, not to mention the toxic tax on carbon emissions.

Although the government has pledged support for the steel industry under the carbon tax regime, this has been insufficient to offset a lack of confidence and allow for strategic planning for the industry's long term survival.

Another piece of the steel puzzle which can not be ignored is that local manufacturers, already facing the headwinds of foreign competition, high dollar and lack of local content into domestic projects, are finding that the cost of raw materials, such as steel, is blowing them out of the water when their quotes for work are compared with those of Asia, where raw material costs are a fraction of what they are in Australia.

This has been evident on the ManufactureLink website where recently Requests for Quotes (RFQ's) have been placed on the system for local manufacture, only to be beaten by Asian competition, all based on raw material costs.

The manufacturing sector as a whole is supportive of the Australian steel industry, because of the quality of the steel itself. Recent examples from the AMTIL Membership base highlight that in using Asian produced steel, you don't actually know what you are using and what is in the make-up of the steel itself.

Our evolving culture of digging our mineral reserves out of the ground and sending them offshore for processing is flawed on several fronts, but whilst the economy is currently riding on the back of the minerals boom, and Australia's economy strong by global standards (albeit two speed), there is largely indifference from the Government as to the plight of the steel and manufacturing sectors, other than token undertakings which are yet to produce results.