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Cheap steel glut discussed on international stage ahead of Arrium creditors' meeting

Tuesday, 19 Apr 2016 04:31:33 | Natalie Whiting

A presentation by KordaMentha will be streamed from Sydney to Whyalla, where Arrium's steelworks are located. (ABC News: Michael Coggan)

The first creditors' meeting of the embattled South Australian steelmaker Arrium will be held in Sydney today, after it went into voluntary administration earlier this month with $4 billion of debt.

Key recommendations:

  • OECD summit discusses steel oversupply
  • China has recognised its need to cut demand for steel
  • Agreement with Morgan Stanley delays Arrium loan repayment

Arrium employees in Whyalla will gather today to watch a live stream of the first creditors meeting of their debt-laden employer with administrators KordaMentha.

Australian Workers Union's Peter Lamps met with workers recently.

"Certainly the feeling of workers was one of frustration and a degree of anger that the Arrium board has allowed the company to get to this position," he said.

The union said it was pleased an agreement had been reached with American firm Morgan Stanley.

The US company had initiated action in the Federal Court, demanding Arrium immediately repay a $98 million loan.

"The union is pleased that obviously an arrangement has been arrived at, because quite clearly the focus should be on where the restructuring needs to be done in order that all of the Arrium entities continue operations well into the future," Mr Lamps said.

The court action has been stayed.

Brussels meeting discusses steel glut

Arrium has said one of the factors contributing to its downfall is the importation of cheap steel from China.

At an OECD symposium in Brussels overnight, Australia's Assistant Science Minister Karen Andrews was part of discussions about the international steel glut.

All of the nations at the summit agreed there was an oversupply issue and it was depressing steel prices.

Ms Andrews said China was starting to act.

"It has reduced, over the last three years, 80 million tonnes of its capacity," she said.

"It's stated it will reduce a further 100 to 150 million tonnes over the next five years.

"So China, as the biggest steel producer has recognised the need to cut its capacity."

However there were concerns that those reductions would not go far enough.

"One of the lessons that was learnt from steel issues in the 1970s was the need to act early.

"So it's certainly been raised as to whether or not the 100 to 150 million tonnes proposed by China is going to be sufficient and whether the five-year timeframe that's been proposed for it to happen is actually fast enough."

She said China and other large producers would be facing ongoing pressure.

The anti-dumping measures in place in various countries have also been on the table.

"It was certainly an issue that was raised — the need to make sure that there was a robust anti-dumping system in place," Ms Andrews said.

"But certainly to make sure that the system is compliant with World Trade Organisation responsibilities."

The Federal Opposition has called for anti-dumping measures in Australia to be strengthened.

Ms Andrews did not rule that out.

"I'd be interested in talking to the industry about what it feels would be the best way forward, because they are the ones that are going to be able to give us the best advice," she said.

The one-day steel symposium in Brussels has finished but a regular OECD steel committee meeting will be held in Brussels tomorrow.

AustraliaPlus


 

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