Australian steelmakers are seeking a reduction of interest rates and warned that if the Reserve Bank of Australia (RBA) would continue with the current trend, the long-term future of the steel manufacturing industry in the country would be at risk.

On the short term, OneSteel Chief Executive Geoff Plummer said at the National Steel Convention in Canberra on Monday that the benchmark rate reduction is necessary to battle economic slowdown and remove the pressure from the high Australian currency.

He blamed distortionary factors for bringing the Australian dollar to an unnecessarily high level which affects the country's steel industry to compete globally.

""We support free trade and a market-based approach - but the playing field must be level," The Sydney Morning Herald quoted Mr Plummer.

Mr Plummer pointed out that while the Australian dollar is totally free and a floating currency, it is not the case for the steel industry's trading partners, particularly China.

He warned of the long-term impact of a high exchange rate on the economy, employment rate and manufacturing capacity. The pressure from the high dollar and cheap Chinese imports caused OneSteel's competitor, BlueScope Steel, to axe 1,000 jobs and announce a $1 billion loss in August.

Mr Plummer said that the RBA should not necessarily follow Switzerland's drastic action last week by placing a cap on the exchange rate to protect export industries, but it must address the distorting factors that cause the rate to be too high.

RBA last week retained the key lending rate at 4.75 per cent due to the volatile global economic conditions.

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