STEEL PRICES - Discover the difference
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STEEL
PRICES
Discover the difference
1 | PIONEER WATER TANKS
THE STEEL PRICE RISE AND WHAT IT MEANS FOR THE AUSTRALIAN CONSUMER If you have tried to buy anything made of steel, or containing steel projects lately, you may have read or been told about a steel price rise. But what is a steel price rise? And what causes it? Many of these price rises are simply stated and not explained, which can lead to confusion and consumer dissatisfaction. This report seeks to clear up some of the reasons behind an increase in the price of steel, and what it means for Australian consumers. 2 | PIONEER WATER TANKS
WHAT FACTORS IMPACT THE PRICE OF STEEL?
How steel is made Iron has been a key part of human in 2021 5, as then nation seeks to
progression since its discovery, continue growing and developing
Iron ore itself, a mixture of iron and and this is truer today than it at a rapid rate.
oxygen, is not very strong, however ever has been. Developing and
In May of 2020, iron ore was
iron with a low concentration of developed nations alike have a
priced at $83.50 USD per tonne,
carbon gives steel its strength reliance on the material to build
and by May 2021, this figure had
and malleability. strong and durable structures in a
skyrocketed to a record $237
timely and affordable manner.
Steel is produced from iron ore USD per tonne.6 Miraculously a
report from the China Iron and
by creating molten steel from iron Increase in the
Steel Association sees the current
oxides in a blast furnace. Blast price of Iron Ore demand of steel not peaking until
furnaces first appeared in the
Iron ore, the key ingredient in steel 20235, as scrap steel recycling in
14th century, and despite obvious China scrambles to catch up.7
production, has been increasing, in
improvements in production rates terms of both price and demand,
Despite political disagreements,
and equipment, the same basic at unpreceded levels since the
and looming threats of trade wars,
processes take place inside the beginning of the pandemic.2
Australian Iron Ore still remains
furnace, using coking coal, iron ore Much of this has been due to
vital to China’s steel production.
and limestone to produce steel.1 increased demand for the product
Currently 60% of China’s iron ore
thanks to government stimulus
The coal is used to create coke, supply comes from Australia, and
in countries such as China and
China’s other major supplier 8,
which then is used to add this Australia3,4, as well as many steel
Brazil, has been struggling with
carbon to the iron, giving the steel mills being forced to close during
the coronavirus pandemic as well
its strength. The limestone – or the pandemic.2
as some significant high profile
flux – is used to remove any other mining accidents.8,9
Iron ore imports in china alone
impurities, helping reduce the iron increased by more than 150% in
to a more basic elemental state. 2020, and haven’t slowed down
3 | PIONEER WATER TANKS
WHAT FACTORS IMPACT THE PRICE OF STEEL?
Increase in the price Impacts of the Many mining and manufacturing
workers also in the past travelled
of Coking Coal Coronavirus Pandemic
both interstate and overseas for
Coking coal, or metallurgical As with almost everything else work14, something that has been
coal, is an important ingredient in our day to day lives, the steel heavily impacted by the curtailing
in current steel production, manufacturing industry has been of international travel, particularly
and despite moves from some
heavily impacted by the Covid-19 into Australia, and out of Brazil.
big names in the iron and steel
Coronavirus Pandemic.
industries, such as Andrew
“Twiggy” Forrest, to move toward Brazil has famously been one of
the more sustainable and less coal the worst hit nations throughout
reliant Green Steel, which utilises
the Coronavirus pandemic, and
hydrogen rather than carbon10,
as they are the second largest
coal looks to be an important part
of steel production for years to iron ore producer in the world13,
come. this has understandably had a
significant impact on worldwide
In part thanks to coal developing
supply, placing more stress on
a bad name around the world
Australian iron ore exports.
reducing willingness in some
countries to mine it 11, and in part Transport and shipping has also
due to the rapid growth of India
taken a hit during the pandemic, as
and China, coking coal is also
the steel industry, like many others,
becoming more expensive and in
has struggled to move iron around
higher demand.
nationally and internationally as
Despite a slump at the beginning effectively and efficiently as was
of the pandemic, the coal price
possible prior to the pandemic.
surged in the second half of
Not only do these transport and
202011, almost doubling from
logistics issues result in delays in
September to December, and it
has since almost doubled again, steel and iron delivery, increasing
meaning the current price of coal lead times, it also lends to
is almost four times that of what it increasing the price of iron ore
was twelve months ago.12 and steel production.
4 | PIONEER WATER TANKS
WHAT ELSE IS HAVING AN EFFECT?
Government incentives projects and customers14, and the set to be installed. This project
full brunt was being seen in new is ongoing and expected to be
and new building costs
builds and projects. completed by 2026.17
As the pandemic spread across the
Metronet is a long term project
globe, many countries’ economies
Exsisting and planned regarding extensions to Perth’s
were impacted or shut down,
and in order to kick-start them,
infrastructure projects transport network, aiming to
connect more of the city, and
governments looked to stimulate Across Australia, existing
reduce the need to transit via the
their economies with incentives infrastructure plans by state and
CBD to get between locations. The
in construction industries both for federal governments have also
Forrestfield-Airport link is currently
businesses and residents.3 been placing high pressures on
underway, with the new Ellenbrook
the supply of steel products.4
In Australia, and many other like set to commence construction
places, this caused a national The Inland Rail project, started in 2021. The Metronet plan also
construction boom, thanks to the by the Gillard Government, and includes construction of 246 new
combination of these government continued by the Abbott/Turnbull railcars.18
stimuli and record low interest Governments, is a 1727km
In New South Wales, the Sydney
rates. New house starts in Australia railway set to connect Brisbane
Metro project, aiming to make
are currently at the highest level in and Melbourne by 2026, with the
room for 100 000 extra customers
over fifty years.14 purpose of bypassing the busy
across Sydney, is also ongoing,
Sydney metro area, and allowing
This has caused an increase in with a project timeline projected
for the use of double stacked
demand for not just steel, building until at least 2024.19
freight trains.16
materials across the board, from
All of these rail projects require
concrete, to timber, to laminated In Melbourne the Metro Tunnel
vast amounts of steel, and not
beams, meaning that the shortage (previously known as the
just for the tracks, but also for
of steel could not be covered Melbourne Metro Rail Project) is an
the construction of platforms,
by other materials to alleviate in-progress project involving the
overhead power lines, and
pressure of demand.4 construction of twin nine kilometre
modification to existing facilities,
underground rail tunnels between
With borders closed, necessary and for any new trains or railcars
South Kensington and South Yarra,
workers can’t be shipped in from that may need to be built for the
with five new underground stations
interstate14, stalling both residential projects.4
and commercial infrastructure
projects alike. This is resulting in a
combination of higher lead times
as well as higher costs.
In a recent report by News.com.
au14, 93% of Master Builders
Association members reported
steel delays. Even the prices of
freight were being increased to
meet demand.15
Many contracts were already in
place, meaning that price increases
weren’t able to be softened across
5 | PIONEER WATER TANKS
WHAT ELSE IS HAVING AN EFFECT?
What BlueScope had still unable to meet the increased However, as demand for steel
demand in the market, even after continues to surge as companies
to say about it? commissioning extra capacity, and try to manage their lead times and
Understandably, as one of the increasing production levels. backlog of projects, BlueScope is
largest steel suppliers and still unable to keep up with market
This lack of supply has resulted in
manufacturers in Australia, demand, forcing rations on steel
longer lead times, as BlueScope
BlueScope Steel has felt the brunt supply.
tries to fairly service the market
of the increases in iron ore and
with as adequate supply of This has also resulted in a
coking coal prices, as well as the
Australian steel as possible. significant increase in the price of
squeeze placed on steel suppliers
steel.
due to unprecedented levels of To try and reduce lead times,
demand. BlueScope has fast tracked new
processing capability, and utilised
Despite having produced a
sea freight for domestic supply, in
record volume of steel for the
addition to current rail and road
Australian market in the 20/21
transport arrangements.
Financial Year20, BlueScope was
6 | PIONEER WATER TANKS
WHAT ELSE IS HAVING AN EFFECT?
Who is this impacting? obtaining steel to manufacture cover the materials costs required
their products3,15,21,22, and those to continue producing industry
A better question might be who that haven’t yet will likely be forced leading Australian products.
it isn’t impacting. Steel is such a to in the not so distant future.
major part of modern life, that Not all impacts are negative,
even without new buildings and The suppliers of these products however, and iron ore and steel
infrastructure, there would still be are facing similar issues to that of companies are recording record
significant demand. steel suppliers. There has been profits, and the Australian iron
significant demand for the building ore industry is booming. From a
Hundreds of every day of new sheds, water tanks and 70 billion dollar industry in 2015,
applications rely on steel, from other home improvements that treasury has predicted the iron ore
water tanks and sheds, to roofing require the use of BlueScope steel. industry in Australia will top 136
and roller doors, to even smaller billion dollars this financial year.
things like brackets, windows and For suppliers such as Pioneer
even car parts. Water Tanks, who refuse to
compromise on quality, and use
Many of these industries have only Australian made BlueScope
been forced to increase their steel, there has been no choice but
prices to cover the costs with to implement pricing changes to
7 | PIONEER WATER TANKS
REFERENCES
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2021 [CITED 2 AUGUST 2021]. AVAILABLE FROM: HTTPS://WWW.RAN- MASSIVELY PUSH OUT WAIT TIMES FOR BUILDING WORK [INTERNET].
BUILD.COM.AU/NEWS/LATEST/STEEL-PRICE-RISE-IS-COMING/ NEWS.COM.AU. 2021 [CITED 2 AUGUST 2021]. AVAILABLE FROM: HTTPS://
WWW.NEWS.COM.AU/FINANCE/REAL-ESTATE/TRADIES-AND-SUPPLIES-
10. ALLEN J, HONEYLANDS T. 'GREEN STEEL' IS HAILED AS THE NEXT BIG SHORTAGES-DRIVE-UP-PRICES-MASSIVELY-PUSH-OUT-WAIT-TIMES-FOR-
THING IN AUSTRALIAN INDUSTRY. HERE'S WHAT THE HYPE IS ALL ABOUT BUILDING-WORK/NEWS-STORY/4C35F8C257290D18B88FEB995936AAF1
[INTERNET]. THE CONVERSATION. 2021 [CITED 4 AUGUST 2021]. AVAIL-
ABLE FROM: HTTPS://THECONVERSATION.COM/GREEN-STEEL-IS-HAILED- 18. METRONET > HOME [INTERNET]. METRONET.WA.GOV.AU. 2021 [CITED
AS-THE-NEXT-BIG-THING-IN-AUSTRALIAN-INDUSTRY-HERES-WHAT-THE- 6 AUGUST 2021]. AVAILABLE FROM: HTTPS://WWW.METRONET.WA.GOV.
HYPE-IS-ALL-ABOUT-160282 AU/
19. AUSTRALIA'S BIGGEST PUBLIC TRANSPORT PROJECT | SYDNEY METRO 4. MURRAY D. TIMBER, CONCRETE AND STEEL MORE EXPENSIVE AS
[INTERNET]. SYDNEYMETRO.INFO. 2021 [CITED 6 AUGUST 2021]. AVAIL- DEMAND SURGES [INTERNET]. THE FIFTH ESTATE. 2021 [CITED 4 AUGUST
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15. BLUESCOPE STEEL RAISING PRICES AGAIN WITH ROLL FORMERS DEMAND-SURGES/
FOLLOWING SUIT. | STEEL SHEDS IN AUSTRALIA [INTERNET]. STEEL SHEDS
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[INTERNET]. SHARECAFE. 2021 [CITED 3 AUGUST 2021]. AVAILABLE FROM: CONCRETE PRODUCTS [INTERNET]. MADEWELL CONCRETE PROD-
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13. GARSIDE M. LARGEST PRODUCER OF IRON ORE IN THE WORLD
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IN%202020. PRICES-ARE-RISING/?SH=425FC7496FCF
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IRON-ORE-HUNGER/ ECONOMIC STIMULUS BOOST [INTERNET]. NIKKEI ASIA. 2021 [CITED 2
AUGUST 2021]. AVAILABLE FROM: HTTPS://ASIA.NIKKEI.COM/ECONOMY/
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8 | PIONEER WATER TANKSToll Free (in Austalia): 1800 999 599 International Phone: +61 8 9274 4577 International Fax: +61 8 9274 4588 Email: commercial@pioneerwatertanks.com.au pioneerwatertanks.com.au The information contained in this catalogue is provided for informational purposes only and to the fullest extent permitted by law, without any representation or warranty of accura- cy or completeness of information or other warranty of any kind including any implied warranty of quality, merchantability, fitness for a pa ticular purpose or non-infringement. Additionally, Pioneer Water Tanks Pty Ltd (“Pioneer Water Tanks”) ABN 65 604 579 651 makes no representation whatsoever, either expressed or implied, in respect of information of third parties that appear in this catalogue. Pioneer Water Tanks®, AQUALINER Fresh® and INDUSTRATEX® are registered trademarks of Pioneer Water Tanks. Zincalume®, Colorbond® and Colorbond Ultra® are registered trademarks of Bluescope Steel Ltd. Pioneer is not a designer of water management systems or a consultant in relation to their use. Recipients of this catalogue should make their own enquiries about the contents of this catalogue and independently verify the applicability, fitness for a pa ticular purpose or suitability or liability with regard to the reliance on or use of any of the information in this catalogue or any Pioneer product. Pioneer will not be responsible for the consequences of reliance on any technical advice given by Pioneer employees, appointed distributors or sub contractors in relation to any matter other than those matters specific to the design manufacture and installation (where applicable) of the Pioneer range of products. Pioneer will be entitled at any time and without notice to change, update, modify, replace, discontinue, improve and delete any information or product in this catalogue. 9 | PIONEER WATER TANKS
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