From February 1, BlueScope customers will face a 38% price increase on steel fabrication products due to supply shortages and increased import costs caused by dumb government decisions.
The increases come amid a home building boom that has outran supply for the monopoly steel maker and the crippling price hikes compound the problems for builders and other downstream makers.
Truecore, with its trademark blue colour, is one of the star products from the company, which late last year flagged a record profit this half year of $2.2 billion, compared to earnings of $1.9 billion for the 2021 financial year.
But builders and their customers around the country report long delays due to supply shortages.
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Steel is not the only product in short supply in the third year of the COVID-19 pandemic, but the plight of BlueScope customers makes a sick joke of Industry Minister Angus Taylor’s decision late last year to impose dumping duties of 13% and more on steel imports from Korea and Vietnam.
Supply chain problems can be blamed for some shortages; this time it’s dumb decision making.
The decision was made on the basis of a complaint from BlueScope itself, which means the company must now pay duty on its imports from Vietnam as a result of its own objection.
By charging duties of 13%, the government is effectively mandating a price hike from BlueScope and importers, which is even more extraordinary given the company has already flagged nearly 40% price hikes through its Fielders subsidiary.
In a letter to customers last year, Fielders explained the price hikes as “due to steel price movements passed on by our supplier BlueScope as an outcome of significant global steel price increases and other economic factors”.
The company warned of more price hikes and the government’s dumping decision makes them a certainty .
Minister Taylor has declined several attempts to seek comment and his office says the decision was simply based on advice from the Anti-Dumping Commission.
But it is Taylor’s signature on the decision and it is plain wrong and dumb.
Dumping duties are imposed when imports are sold in Australia at below the normal value in the country of origin and cause injury to the local manufacturer.
The first part of the equation may or may not be right in this case, but the second is demonstrably false based on all available evidence from the complainant itself.
BlueScope leads the Australian market in making complaints, with steel and aluminium accounting for 72% of the cases before Anti-Dumping Commission boss Dr Bradley Armstrong.
Its stock price is also trading just below recent 10-year highs.
Decisions like these raise serious doubt over the government’s ability to boost the economy.
Importers suffer supply shortages because imports stop, prices increase and downstream users and their customers face both shortages and price hikes.
The mere hint of dumping action freezes imports and raises prices, which hurt downstream producers and, ultimately, consumers.
This is why the ACCC took action last year against former BlueScope executive Jason Ellis.
The ACCC’s complaint, rejected outright by Ellis and the company, says he threatened dumping complaints against steel importers as part of a campaign to restore order to the local steel market a few years back.
A decision on the civil case is due early this year and has the potential to rock BlueScope, as Ellis, the son of former BHP chair Jerry Ellis, was at the time of the complaints a direct report to present BlueScope chief Mark Vassella.
In court, company representatives rejected suggestions of any link between the two.
As this plays out, steel shortages continue and customers are paying more for the product.