steelworker
A steelworker places scrap metal inside a furnace at the Libyan Iron and Steel Company (Lisco) in Misrata, Libya May 18, 2015. Libyan steelmaker Lisco is struggling to keep its mill rolling in a war zone, no easy feat when the power cuts off every night, shippers are reluctant to dock and foreign contractors are long gone. Picture taken May 18, 2015. Reuters/Ismail Zitouny

Steel business giant BlueScope finds it mandatory to review the operations of its Australian and New Zealand steel plants to figure out its position around the globe after the constant fall in the steel prices. The steelmaker of Australia plans to inform its investors about the progress of the review in November during its annual shareholder meeting.

The Steel Index depicts that the steel manufacturer has diminished the export price of hot-rolled coil steel of China to approximately 40 percent over the past year. The cheaper export of steel in China has led to a significant rush, which is thereby making it tough for the producers in countries like South Korea, Australia and Japan to survive.

The Port Kembla plant of BlueScope seems to forward towards a darker future after the announcement of around 500 jobs to be cut reduce import cost. The Chinese economy has reduced the demand of steel, which once constituted big revenue for the steel giant in Australia. Whether the company can save AU$200 million annually will determine if Australia reaches the minimum limit needed to operate the Port Kembla Steel Works. Within six to eight weeks, the figure is believed to clear.

Chief executive of BlueScope, Paul O’Malley, warned on Monday that the steelworks is on a knife edge. “We either deliver AU$250 million of cash cost reduction – and that will require multi-stakeholder contribution – or we will need to withdraw from steel supply,” he said. Similar is the case of New Zealand with BlueScope targeting to save $NZ50 million (AU$45.66 million) by 2016-17 from its Glenbrook mill and two mines.

On Monday, BlueScope Chairman Graham Kraehe said that the company has to review the major challenges leading to huge losses in steelmaking in Australia and New Zealand. In spite of reporting best profits even before the financial crisis, it has to face such a challenging economic situation on a global sphere.

BlueScope requested the federal and state government to provide some tax relaxations.

Also on Monday, the Abbott government held a meeting with BlueScope Steel and unions followed by the company’s warning regarding the Illawarra operations halt and around 5000 job cuts. In the meeting, the steel giant indicated two options to deal with the situation. The first involved cost cut by AU$200 million at the Port Kembla plant, which would lead to 500 job losses. The second was “Plan B” that would prompt ceased production with 5,000 job losses in the Illawarra.

Labor MP Stephen Jones said that both the options are unwelcoming. The MP under whose electorate the Port Kembla plant falls insisted on non-monetary assistance for the steel producer from the government. “The best case scenario is bad but the worst case scenario is disastrous,” he said .

BlueScope Steel reported full-year profit of AU$136.3 million, but is still incapable of making up for the loss incurred last year. The most vital concern of the steel giant is the double production of steel by China that accounts to over 100 million tonnes per year and that too during the time when the demand in China for steel is falling constantly.

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