INDUSTRY INSIGHTS | STEEL AUSTRALIA | WINTER 2021
MESSAGE FROM THE ASI CHAIR A few months back, we were talking about the post-pandemic recovery in various economies around the world, including Australia. However, as the 2020-2021 financial year came to a close, we were once again experiencing disruptions. While we had become somewhat accustomed to these, to a certain extent, we thought they were behind us. While these disruptions have hit certain sectors of the economy quite hard, our industry has been able to maintain momentum. This is a result of the continued strong growth in the infrastructure and residential construction markets, driven by the stimuli initiated by state and federal governments over the course of the last financial year. The booming construction markets we are experiencing in Australia— coupled with similar conditions in other major economies around the world—have led to substantial shortages of construction materials, steel included. Steelmaking capacity in some countries that was idled in the early stages of the pandemic has been very slow to come back online. In addition, major exporting countries, such as China, have either made the decision to reduce export steel trade or, in the case of India, have had their supply chains interrupted due to new COVID-19 outbreaks. The massive worldwide demand for materials has also put pressure on the availability and cost of sea freight. These freight shortages have consequently created inflationary pressures, which have increased the price of most construction materials.
Bernie Landy Chair, Australian Steel Institute
Again, steel is included in this dynamic. There is no doubt that the efforts by our state and federal governments to stimulate construction activity have successfully delivered increased demand to suppliers throughout the construction sector. ASI’s members have experienced this first-hand. However, the rapid increases in the price of materials are possibly an unintended consequence of this booming demand, which could still run on for some time. It is difficult to predict when a turning point might come. The new financial year is therefore likely to once again bring significant opportunities for our industry but, as usual, there will also be some challenging risks ahead that we will need to manage.
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The booming construction markets we are experiencing in Australia— coupled with similar conditions in other major economies around the world—have led to substantial shortages of construction materials, steel included."
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