Chinese subsidies put local steelmakers at unfair disadvantage, says ASI

Australian steelmakers are at a disadvantage due to Chinese Government subsidies and the undervalued yuan, the Australian Steel Institute (ASI) says.

ASI industry development manager, Ian Cairns said he could understand – from a commercial perspective – why resources companies were turning to China as a source of cheap steel, according to a report by The Australian.

For months now the ASI, the peak steel industry body, has been gunning for a whole-of-government approach supported by a range of policy measures to address the plight of local steelmakers over the lack of local demand.

Cairns called on the Federal Government to implement local content policies that would put more pressure on companies to award major contracts to the local steel industry, which was running at only 50 per cent capacity as major contracts went offshore, The Australian reported.

The ASI has expressed concerns over the amount of imported fabricated steel on major resource and infrastructure projects.

For example, Perth mining company Gindalbie Metals recently revealed it imported most of the steel used for its $2.6 billion Karara iron ore project in Western Australia from China, The Australian reported.

The reason given? Local bids were three times more expensive.

Hitachi Construction Machinery’s new headquarters in Wacol, west Brisbane, would also be built with Chinese steel, according to a report by the Brisbane Times.

The decision by Australian construction company, Spaceframe, which won Hitachi’s tender, appeared to have been made because it was cheaper to buy steel in China, cut it to length and ship it back to Brisbane than it was to buy Australian-made, the report stated.

Cairns said Australian steelmakers had to pay higher wages and taxes while also contending with greater government regulation in areas such as occupational health and safety.

"The Chinese steel industry is also subsidised by the government and the yuan is undervalued by 30 to 40 per cent," Cairns told The Australian.

The Australian Steel Institute (ASI) is the country’s peak steel industry body.

Image: Australian Steel Institute (ASI)