The Driving Forces Behind Steel Prices in Australia

Steel is an essential raw material used in producing a wide range of finished products, from construction materials to consumer goods, making the price of steel a critical factor in the global economy. However, many factors can impact steel prices, making it difficult to predict what it will be at any given time. In this article, we will examine the key factors determining the price of steel and how they can impact its cost for suppliers and their customers–builders, engineers, etc.

long steel beams on steel factory floor

Steel Pricing Explained

Steel prices are subject to fluctuations and can change rapidly due to supply and demand, the cost of raw materials, energy prices, manufacturing capacity, the global economy, government regulations, natural disasters and war. 

Changes in steel prices impact how much suppliers can buy and how much they can sell their products for to make a profit. Conversely, this affects how much builders need to spend on construction materials, affecting which materials are used and how much can be purchased at once. 

Supply and Demand

The price of steel is primarily determined by the laws of supply and demand. More demand equals higher prices; conversely, lower demand equals lower prices. Steel manufacturers will produce more steel when there is a high demand, increasing the supply, and reduce production when demand is low, reducing the supply.

On a global scale, changes in demand and supply can be influenced by various factors, such as economic growth, construction activity, and technological advancements. For example, if there is an increase in demand for steel due to increased construction activity, e.g. new government development programs like the Sydney WestConnex, the price of steel may increase. On the other hand, if there is an increase in steel supply due to advancements in production technology, the cost of steel may decrease.

In Australia, the supply and demand for steel are influenced by similar factors and domestic economic conditions. Because the Australian steel industry is closely tied to the construction industry, changes in demand for construction materials can significantly impact steel demand. 

For instance, according to the most recent data from the Housing Industry Association (HIA), sales of new houses fell 4.6 per cent in December and were 42 per cent lower than they had been a year earlier. Moreover, according to statements made to the ABC from HIA chief economist Tim Reardon, “one in five recent new home buyers having to cancel their new home building contract as their access to finance was reduced by the rise in the cash rate.”

Raw Material Costs

The cost of raw materials used in steel production can significantly impact steel prices globally and in Australia. Steel production requires raw materials such as iron ore, coal, and scrap steel. Fluctuations in the cost (supply and demand) of these materials can impact steel production costs. Despite being a major global producer of iron ore, rising raw material costs can affect steel prices in Australia.

Energy Prices

Steel production is an energy-intensive process, and changes in the cost of electricity and energy prices can impact the cost of producing steel. Any disruption in the supply of electricity can significantly impact steel production. Moreover, the availability of energy sources such as coal, natural gas, and renewable energy can also affect the cost of producing steel in Australia. According to Vivek Dhar, Director of Mining Energy at CommBank, when gas prices rise, which they have been, “you can almost think of it as a one-for-one kind of impact on steel [prices]”.

Steel Production Capacity

When steel production facilities operate at total capacity, the cost of steel will be low, as there is a plentiful supply. When steel production facilities operate at reduced capacity, the price of steel will be higher as the supply is limited.

Global Economy

Beyond global supply and demand of raw materials and finished goods like steel, the health of the global economy, i.e. whether we’re in a recession or profits are booming, can significantly impact the price of goods and services everywhere. When the global economy is weak, steel demand will be low, causing the price to fall. Additionally, currency exchange rates can also play a role in determining steel prices.

Government Regulations

Government regulations can also impact the price of steel. For example, trade tariffs and taxes can increase the cost of steel, while subsidies and tax breaks can reduce its cost. Environmental regulations, such as emissions standards, can also increase the cost of steel production.

In a recent address to the Australian Steel Convention by the Minister for Industry and Science, Ed Husic revealed the steel industry “supports over 110,000 jobs and contributes nearly $13 billion to the nation's economy.”

Looking to position manufacturing as a “central priority”, the Australian Government is maximising the use of Australian-made goods through the Future Made in Australia commitment.

Natural Disasters

Natural disasters, such as hurricanes and earthquakes, can also impact the price of steel. These events can disrupt the supply chain, causing a shortage of steel, which can drive up the price. Natural disasters can also damage steel production facilities, reducing supply and increasing costs.

For example, the effects of tropical Cyclone Veronica in Western Australia in early 2019 caused disruptions to the supply of iron ore. Brazil also experienced a similar production decline in 2018-2019 following the catastrophic collapse of a tailings dam in January 2019. An estimated 90 million tonnes of production were sidelined during this period.


Conflicts between countries can have a significant impact on steel prices both globally and in Australia. Steel is a crucial component in producing weapons and military equipment, and increased demand for steel during times of conflict can drive up the price.

On a global scale, war can disrupt steel production and distribution, leading to a supply shortage, which increases steel prices as the demand exceeds the available supply. Additionally, war can impact the cost of raw materials, such as iron ore, used in steel production. For example, if the supply of iron ore is disrupted due to conflict, the price of iron ore can increase, leading to a higher cost of producing steel.

In Australia, the impact of war on steel prices can be significant, as the country is a major producer and exporter of steel. The Australian steel industry is closely tied to global demand, and increased demand for steel during times of conflict can increase the steel price in the country. Additionally, the Australian government may impose restrictions on steel export during times of conflict to ensure the country has sufficient supplies for its own needs, resulting in a supply shortage and higher prices.

In March 2022, the Washington Post warned that Russia’s invasion of Ukraine “threatens to turn steel into a luxury commodity.” The magnitude of the steel industries in Russia and Ukraine contributes to the price increase of commodities. Russia is the third-largest exporter of steel in the world, behind China and Japan, while Ukraine is the eighth-largest.

According to the steel producers union, Ukraine’s steel production fell by 70.7 per cent to 6.26 million tonnes in 2022—a far cry from 2021, where steel output rose by 3.3 per cent to 21.3 million tonnes.

Steel Prices in Australia

In Australia, prices for steel products in the December quarter, like steel beams and sections, fell by -2.1 per cent due to reduced steel costs, improved supply conditions and lower shipping costs, according to the Producer Price Indexes from the Australian Bureau of Statistics. 

According to Ibis World, the global price of iron ore and steel was “expected to contract sharply after reaching record highs” due to lower demand. Likely attributed to the continued lockdowns in China resulted in a decline in China’s steel consumption and global monetary policies introduced to reduce inflation, namely raising interest rates which weakens consumer demand.

Prices were also expected to decrease as global supply chains recovered from the Covid pandemic. 

Bluescope echoed this statement, predicting steel prices would fall after a record year that saw the company achieve the highest underlying annual profit in its 20-year history, according to the Financial Review. 

The market's "hesitancy" or weaker steel demand, according to Bluescope Chief Executive Mark Vassella, was brought on by end consumers becoming hesitant in a dropping pricing environment.

Locally, anticipated domestic growth and infrastructure initiatives (the Metro Tunnel in Melbourne and the Sydney Rail Project) could balance these price drops. Unfortunately, steel prices are unlikely to return to Pre-Covid levels, which were between 35 to 40 per cent cheaper than peak prices in 2022.

Global Steel Prices

A CRISIL analysis states that due to weak steel demand, global steel prices (free-on-board, China) are expected to stabilise in 2023 after dropping over 40% to USD$570-590 per tonne in December 2022 from early-April highs over USD$1,000 per tonne. Although world steel output fell 8.7 per cent in the September quarter of 2022, the Resources and Energy Quarterly Report (December 2022) predicts rebounding growth of 1.1 per cent in 2023 and 2024 for global steel production.

2022 Steel Price Timeline:

  • April - May 2022 saw steel prices peak.
  • October - November 2022, steel prices decline between 5 and 10 per cent. 
  • December 2022 saw further price drops between 3 and 5 per cent.
  • Overall, prices fell by approximately 12 per cent since their peak in April.

2023 Steel Price Predictions:

  • Steel prices to reduce by a further 5 per cent between January - February 2023
  • Potential price increases between April - May 2023, mirroring last year's price hike.

As of 22 November 2022, IBISWorld forecasts the PPI of iron and steel to decline sharply by 13.1 per cent in 2022-23. 

Affordable, High-Quality Structural Steel From Steel Builders

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