In characteristic Kiwi style, the Reserve Bank of New Zealand´s decision in late November to lower its official cash rate (OCR) by 50 basis points was a bold move and contrary to the hesitancy being shown by most central banks around the world. In cutting the OCR to 4.25%, the RBNZ commented: “Domestic economic activity remains below trend, as a result of weakness in demand for durable goods consumption and investment. This has been reflected in falling activity in interest-rate-sensitive sectors such as construction, manufacturing and retail trade.” New Zealand´s steel industry has been smack in the middle of that problem. In a Trading Update issued in mid-November, Steel & Tube said the weakness in the economic environment seen in the latter half of the fiscal year 2024 had deteriorated further and had impacted its sales volumes. The Update said demand for steel had hit recent lows and margin pressure had intensified, a fact publicly highlighted by other industry participants.  As a consequence,

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Steel & Tube said its revenue for the first four months of the current financial year was down $41.6 million on the prior comparative period to $141.7 million; and that normalised EBIT was showing a loss of $5.0 million. However, with annual inflation now at 2.2%, the RBNZ said economic growth is expected to recover during 2025, as lower interest rates encourage investment and other spending. In this scenario, the RBNZ would be able to lower the OCR further early next year. Such a move would be welcomed by the steel-hungry home building sector which has been on a forced diet over the past few years. For the time being, however, the situation remains subdued. Stats NZ has reported that the volume of building work in New Zealand was $7.8 billion in the September 2024 quarter, down 3.2% compared with the June 2024 quarter. Residential building work fell 3.5% to $4.8 billion and non-residential building work fell 2.8% to $2.9 billion over the same period. “Quarterly residential building activity (has now) reached its lowest level in four years, in seasonally adjusted terms,” said Michael Heslop, Stats NZ´s economic indicators spokesperson.

Mark Malpass, CEO of Steel & Tube said in the Update: “The work we have done over the past two years has created a stronger, streamlined company. Importantly, we have retained sufficient ‘muscle’ in the business to ensure we can move quickly to capture profit expansion opportunities as demand returns. We are maintaining our market share and have more than 13,500 active customers.” He added that the company balance sheet is strong, with cash of $16.7 million and no borrowings at the end of October 2024. Malpass said market conditions are presenting new merger and acquisition opportunities and that Steel & Tube´s $100 million debt facility offers optionality during a tough time for the industry. Susan Paterson, chair of Steel & Tube, said: “While the timing of an economic recovery remains uncertain, there are some positive themes that should lead to improved activity over the next 12 to 18 months. Lower interest rates are expected to stimulate the construction and manufacturing sectors. Longer term, there is a significant need for maintenance and new infrastructure in roading, health, water, climate resilience and renewable energy. Many of these projects are in areas where Steel & Tube has specialist expertise, for example in wind farm construction.”

November saw the announcement of this year´s winners in the Excellence In Steel Awards, conducted by Steel Construction New Zealand (SCNZ). Close to 300 structural steel industry leaders and specialists gathered in Rotorua for the annual event which showcases the sector’s commitment to innovation, best practice and collaboration. The winners were:

• Supreme Winner and Standalone Residential category winner: Grayson Engineering for Geo Domes
• Over $3 million category winner: D&H Steel Construction for University of Auckland Recreation and Wellness Centre
• $1.5 – $3 million category winner: PFS Engineering for Peacocke Cycle Bridge
• $500,000 – $1.5 million category winner: Lewis Bradford Consulting Engineers and Acme Engineering for Touchdown Sculpture
• Under $500,000 category winner: PFS Engineering for Spiral Staircase
• Earthquake Strengthening category winner: Petone Engineering for Lambton House Diaphragm Retrofit

The event also acknowledged the industry´s emerging talent. Reegan Glass from Foster Engineering was named Apprentice of the Year, while the Young Achiever of the Year award went to Aki Liyanage from Beca Group. “We are committed to investing in the future of New Zealand’s structural steel industry and nurturing the next generation of talent,” said SCNZ Chair, Malcolm Hammond. “As a well-established industry we have an obligation to impart our skills and experience to our up-and-coming structural steel specialists to safeguard the sector’s future,” he added. David Moore, managing director of Grayson Engineering, was the 2024 recipient of the SCNZ Chair’s Award which recognises individuals who have made a significant and lasting contribution to New Zealand’s structural steel industry.

Steel Construction New Zealand aims to advance the interests of New Zealand’s diverse steel construction industry by promoting the benefits of steel solutions in building and infrastructure projects. Members include manufacturers of structural steel and steel products, distributors, fabricators, designers, detailers, galvanisers, and paint and building supply companies. SCNZ provides its members with technical advice on the latest in steel design trends and standards, networking opportunities and is a representative voice with key industry and government decision-makers.