Domestic Price of Iron & Steel

IBISWorld forecasts the PPI of iron and steel to decline by 0.1% in 2024-25, to 134.4 index points. Global market prices partly determine the domestic price of iron and steel, due to the international trade of these commodities. In the 2025 calendar year, the world prices of iron ore and steel are expected to contract. The decline stems from several factors, including reduced global construction activity, lower demand for iron ore and steel, ongoing economic challenges and structural shifts in steel demand across key industrial sectors, particularly in China's property and infrastructure markets. The high interest rates and inflationary pressures are weighing on the manufacturing, construction and real estate sectors globally. In particular, continued weaknesses in China’s property sector have dampened the nation’s steel demand. Aside from economic factors like inflation, the downturn in China’s property sector has also been driven by government policies. For instance, the Chinese Government has asked local governments with significant debt to delay or halt some of its infrastructure projects. This, combined with China’s substantial budget allocation towards its manufacturing and technology sectors, signifies the nation’s commitment to shift away from the real estate sector. However, Australian economic activity has partially offset the 2024-25 price declines due to these Chinese economic dynamics. The domestic development of significant infrastructure projects, like the Sydney Rail Project, demands considerable quantities of iron and steel.

Iron and steel prices have been volatile over the past five years because of changes in global supply and demand conditions for key inputs, such as iron ore. Chinese steel manufacturing activity in early 2020 was stunted as pandemic restrictions spread through the economy, reducing demand for steel feedstocks like iron ore and weighing on prices. As activity recovered, supply constraints in Brazil sharply elevated iron ore prices in 2020-21. India has emerged as a net importer target as their economic activity ramps up. Despite their focus on in-house production, India hasn't been able to keep up with their own demand. To accommodate their own demand, the country's steel exports have sunk to a six-year low and Australia and China have sent more steel across.