Steelmakers will face a tough year in 2013, with supply outpacing demand and the strong Australian dollar cutting into profits, according to Ernst & Young's annual steel report.
ABC News reports E&Y head of global mining and metals Mike Elliott said government subsidies around the world were partly to blame for the oversupply, with unprofitable factories relying on handouts to stay afloat.
“Some of the zombie mills are those which really commercially should be shut but, in many places around the world, continued government subsidies, direct and indirect, are actually keeping them as part of capacity,” he said.
Elliott said 2013 would be a “major year of restructure” for the steel sector, and rising debts would force many manufacturers to either sell off parts of their business or close their doors completely.
"Within Australia the steel producers suffer the same background conditions that are around the world, in fact, it is probably accentuated in Australia because of the high Australian dollar," he said.
Elliott tipped rising financial pressure to force local businesses into further reducing staff in 2013, and said productivity improvements may also threaten job numbers.
Earlier this month Australian Bureau of Statistics data revealed there were fewer manufacturing jobs on offer than at any time in the past decade.
And last week Brisbane stainless steel maker Spillane Fabrications went into administration after failing to repay its debts.