In response to media and industry announcements regarding global steel output and to better inform our customers around the current market conditions, Galintel has prepared an update in our ongoing communication around this topic. As Australia begins to emerge from lockdowns, a challenging global economic recovery is underway.
In Australia, and across the globe, there is a significant increase in the demand for steel. However, production worldwide has decreased, creating a deficit in availability. This has placed an enormous burden on suppliers globally, pushing pricing to record highs. Within our business we harness our unique hybrid supply chain and global reach to provide customers with reliable service and dependable quality. This year we have worked to absorb and minimise these impacts as sustainably as possible. However the market is experiencing considerable and unprecedented increases in raw materials and finished products locally and through global supply partners.
The World Steel Association forecasts continued steel demand, with a high backlog of orders expected as nations rebuild inventories and further COVID recovery progresses. We expect steel demand in Australia to remain relatively high for some time and cannot forecast when to begin to see this recover.
The significant drop in production out of China, down 13.2%, has a substantial impact on Australian supplies. It is essential for our market to be aware of these changes as authorities in China are proactively encouraging lower output, with further reductions in production likely in the coming months. In other markets, such as the USA, hot-rolled coil has seen the price jump 343% year on year due to the reduced output globally.
Other factors impacting supplies and pricing include shipping availability, labour force impacts resulting from COVID restrictions and increased infrastructure investments globally to stimulate economic recovery.
These conditions place considerable pressure on the Australian steel market and local supplies of raw materials. Many will have seen that mining and metal stocks continue to rise, as they benefit from high pricing because of the supply and demand imbalance. The increased local steel prices are reflected in ASX reports of record-breaking profits. We continue to work with BlueScope to manage continuity of supply during a period of sustained demand.
We can reassure our customers that we understand the difficulties of rising prices impacting the market locally. We are working with all our partners to ensure consistent supplies, despite the availability issues outlined. The Galintel commitment is to continue to provide our customers reliable service and dependable quality, providing you with confidence in your supply chain. Our teams continue to work hard to ensure stocks are available to meet the surge in demand from the market.
We appreciate your patience and ongoing support. Our team is available to assist with any queries you may have, contactable via 1800 LINTEL or email@example.com.
References – All information provided correct as of 18 October 2021:
• World Steel Association ‘World Steel in Figures 2021’. Published 3 June 2021. Available at: https://www.worldsteel.org/steel-by-topic/statistics/World-Steel-in-Figures.html
• World Steel Association ‘worldsteel Short Range Outlook October 2021’. Published 14 October, 2021. Available at: https://www.worldsteel.org/media-centre/press-releases/2021/worldsteel-Short-Range-Outlook-October-2021.html
• Australian Steel Institute (ASI) ‘Global Steel Market Dynamics Update’ . Published 29 September, 2021. Available at: https://www.steel.org.au/news/news/global-steel-market-dynamics-update/
• Reuters ‘Global steel output falls in August, first time in a year’. Published 24 September, 2021. Available at: https://www.reuters.com/article/steel-output-idUSKBN2GJ1HP
• Forbes ‘Amidst Stock Downgrade And Steel Price Drop, How Is U.S. Steel Stock Coping?’. Published 14 October, 2021. Available at: https://www.forbes.com/sites/greatspeculations/2021/10/14/amidst-stock-downgrade-and-steel-price-drop-how-is-us-steel-stock-coping/?sh=1086ae1445c1
• ABC News ‘Westpac profit to suffer $1.3 billion hit, ASX drops for second straight day’. Published 12 October, 2021. Available at: https://www.abc.net.au/news/2021-10-12/inflation-concerns-asx-usd-wall-street-oil/100531186