Continuing financial market volatility both locally and internationally has impacted the steel market significantly with price and production volumes changes being experienced in the steel production sector internationally.
Massive demand for scrap metal experienced early in 2008 pushed its price to unprecedented highs. Forecasts by the International Iron and Steel Institute of shortages in scrap by 2012 now seem unlikely, with demand reducing significantly over recent months and a commensurate reduction in the cost of scrap has resulted.
Contract prices for coking coal and iron ore were settled in April this year. The premium for hard coking alone increased by 210%, however this price should reduce in the face of softening demand.
Despite the softening prices of raw materials, steel prices in Australia remain high due to the 30% fall in the value of the Australian dollar. Chinese steel makers are also looking at reduced production outputs with a view to maintaining the current high price levels.
Overall steel prices are unlikely to reduce in Australia in the short term despite the price adjustment on international markets.
