The downward trend of the New Zealand economy in 2024 became official in mid-December when the government announced that gross domestic product (GDP) had declined by 1.0% in the September quarter. Coupled with the June quarter´s revised 1.1% fall in GDP, this meant New Zealand´s economy was once again in recession. According to Stats NZ, during the September 2024 quarter, activity declined in 11 of the 16 industries which make up the production measure of GDP, with the largest falls in manufacturing, business services and construction. The steel industry, which already knew full well the marketplace was weakening, has thus had to temper its expectations for a recovery during the next 12 months. In its December Procurement Update, Steel & Tube discussed the notion of an inflection point: that moment which indicates a change in the market. The “bottom” of the market had been expected to be found before the middle of 2025; however, the timing of the inflection point is now far less

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certain. “Steel and metal demand and supply is highly cyclical, likewise is pricing,” said the Update´s author, Brendan Smith, Product and Market Manager – Strategic Growth. “At present, world demand is reminiscent of the post-GFC period, with a significant fall in trading volumes from both the manufacturing and construction sectors. According to the World Steel Association, the prospect of a rebound by the end of 2025 is fragile.” Smith said any improvement in global steel markets will depend mainly on China, the largest steel and metal producer and consumer in the world. The trouble is, for the past three years steel demand in China has been noticeably reduced due to a collapse in the country´s property market. Bloomberg Economics has reported that China now has the equivalent of 60 million unsold apartments. With growing steel inventories, Chinese mills have increasingly sought to offload their lower-priced steel onto the international market. This has led to protectionist policies being developed, most notably import tariffs soon be imposed by the incoming President of the United States, Donald Trump. The situation has been exacerbated by conflicts in the Middle East which have created a crisis in the Red Sea causing freight rates in 2024 to be at double their 2023 average. The impact on the New Zealand steel market of all this geopolitical and fiscal uncertainty is that the “bottoming out” of the downward trend may be more prolonged than originally thought.

Meanwhile, there´s no shortage of controversy in New Zealand politics where – depending on your point of view – the recently-passed Fast-Track Approvals legislation is either a welcome stimulant for the failing economy or the beginning of the end for the environment. “The Bill contains a list of 149 regional and national projects selected through a robust process including an assessment process run by an independent advisory group,” said RMA Reform Minister, Chris Bishop, last month. One of those projects includes the building of a structural steel plant in Waikato which would create up to 200 jobs (more details below).

The coalition government’s Fast-Track Approvals legislation passed into law in December, despite thousands of public submissions opposing it. “The passing of this law is a dark day for New Zealand,” said Richard Capie, a spokesperson at conservation organisation Forest and Bird. “It slashes environmental protections, silences local voices and is an affront to good law-making,” he added.

In defence of the Bill, Mr Bishop said, “For too long New Zealanders have had to put up with overly restrictive planning rules that stifle much-needed economic growth. The coalition government is cutting through the jumble of consenting processes so we can deliver new infrastructure up and down the country, grow our economy, and provide much-needed new jobs for the regions.”

In what would be good news for the steel industry, Mr Bishop said there are 43 infrastructure projects on the list. These would help address the country´s infrastructure deficit and would result in at least 180km of new road, rail and public transport routes. He also pointed to 44 housing developments which would enable up to 55,000 new homes to be built in New Zealand’s major growth centres and across the regions, playing a significant part in dealing with New Zealand’s housing crisis. There are 11 mining projects on the list, the completion of which would support the Government’s aim to double the value of mineral exports to $2 billion by 2035. Whether or not the new legislation prompts an inflection point in the New Zealand steel market is yet to be seen.

Mystery had surrounded the proposed steelmaking plant in north Waikato. However, National Green Steel project director, Vipan Garg, revealed in December it would be built on 53 hectares between Springhill Prison and Hampton Downs Motorsport Park, if approved. National Green Steel is a new company, but its main shareholders have been operating National Steel in Auckland since 2011 to recycle scrap steel. The project – involving making steel from scrap metal at Hampton Downs – is on the government’s Fast-Track Approvals list and is expected to cost in excess of $100 million. Mr Garg said his company is working hard to get its application in order and that National Green Steel would be in a position to start site excavations within six months of a successful application.