11 Nov 2011

Volatile steel prices hit Steel Tube

4:45 pm on 11 November 2011

Extremely volatile steel prices and the unsettled New Zealand dollar are likely to continue to challenge the steel industry.

Shares in Steel Tube Holdings plunged almost 8% on Thursday, after the steel products manufacturer warned that its first-half profits will be lower this year because of slow activity in all its major markets.

Steel Tube chief executive Dave Taylor says competition is intense and margins have been squeezed.

Mr Taylor says the industry and customers are also having to get to grips with extremely volatile steel prices.

While the Christchurch rebuild will provide a much-needed boost to construction activity, he doesn't expect it to get under way until the second half of 2012.

That would start with residential, he says, and then at some point the commercial rebuild would follow.

Because of changes to some codes, Mr Taylor says, the steel intensity used in both residential foundations and commercial structures will increase, which he says is clearly good news from the company's perspective.

The company is still working out what it will gain from those changes.