Steel price impact becomes clearer

By Hugh Stringleman

Friday 2nd July 2004

Steel users will feel the harsh impact of worldwide price increases during the third quarter, Fletcher Easysteel general manager John Beveridge has warned.

Three lag effects mean that local prices have not yet peaked, but they will soon fully reflect supply price increases of 30-50% from steel mills around the world.

Steel suppliers such as Fletcher Easysteel and Steel and Tube have raised selling prices by 10% a month since March.

Beveridge said the lag effects were order lead time, shipping time and local stock holding, each of about two months' duration.

"Local mills are in the process of notifying us of further increases, particularly in products like sheet, coil, plate, pipe and hollows in the third quarter," he said.

The price increases are in the order of 12% in pipe and hollows.

Easysteel claims excellent stock cover, which has enabled drip feeding of price increases while satisfying all the local demand.

The exception is galvanised steel coil, which is in short supply from NZ Steel at Glenbrook in South Auckland.

Easysteel recently visited steel mills in Asia, and took advantage of a short pause in the extraordinary run of Chinese buying to secure several large orders for New Zealand.

"We see the steel prices remaining very firm for quite some time now, and most suppliers are allocating out capacity, which is not a condition likely to result in price reductions. As a distributor from a very small market, we must pay the price they ask and accept an allocation of our requirements as well," Beveridge said.

Local producers are also allocating steel due to demand and various production constraints.

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