While there has been a decrease in the demand for steel recently, the market is forecasted to trend upwards over the next five years. This has been driven by the increase in construction projects such as tunnels, roads, and bridges. Favourable domestic input prices and a depreciating Australian dollar have allowed local producers to deal with the threat of low cost imports.
However, as domestic and international demand for these products increases, local supply will become harder to secure, pushing some firms to buy from offshore producers. Importing product from China, the largest exporter, with a weak Australian dollar can lead to a significant increase in operating costs.
To take advantage of the current and future market conditions, Australian businesses must be proactive in sourcing steel locally if they wish to lower production input costs. Those who do source from international suppliers may be stuck with less competitive pricing and an increased supply risk. The increased lead time and distance between buyer and seller create the need for more accurate forecasting and supplier management to reduce the supply risk.
