In times of need, a mere glimmer of hope can take on larger-than-life proportions. Thus, the increase in home consents announced by Stats NZ on March 4 might well be latched onto as a sign that the New Zealand steel industry has turned the corner. The figure of 2203 homes consented in January was 11% higher than January 2024. And in a further boost to the growing mood of optimism, several economic fundamentals are now in a favourable position. Inflation has come down to 2.2%; unemployment at 5.1% has now probably peaked; and GDP could hardly fall any lower. Surely the pendulum is about to swing. Maybe so, but in the meantime the effects of recession are still abundantly clear: especially in the half-yearly figures announced in February by NZ Steel, Steel & Tube, and Fletcher Building. In the six months to December 31, 2024 (1H25), New Zealand Steel´s underlying profit fell 88% to $3.1 million, from $25.5 million a year ago. Its revenue was down 14% to $427.8 million. The company´s CEO,

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Robin Davies, likened domestic demand for steel to the levels experienced during the global financial crisis. “I’ve been in New Zealand Steel now for just over 17 years and it’s the weakest demand I can remember in that time,” he said, though he added demand had now likely reached the bottom of the curve.

During the same six months to the end of 2024, Steel & Tube could only manage revenue of $196 million, down 25% on the corresponding period of the year earlier. Competitor pricing pressure had flowed through to margins and the company reported a net loss after tax of $10.4 million. Chief executive, Mark Malpass, said: “Steel & Tube is a cyclical business and our 1H25 results are reflective of the recessionary environment. Demand for steel remains at the lowest levels since the 1990s.” Notwithstanding, Steel & Tube ended the half year with no bank debt and a positive cash balance of $17.5 million, representing about a $9 million improvement on June 30, 2024. It has an undrawn $100 million bank facility in place to support growth.

In its figures for the first half of the 2025 financial year, Fletcher Building reported revenue from continuing operations at $3,583 million, down 7% from the $3,860 million of 1H24. This resulted in a net loss after tax of $134 million compared to a net loss after tax of $120 million in 1H24. Managing Director & CEO, Andrew Reding, said: “The first half of the 2025 financial year continued to be a challenging period for our businesses as very difficult trading conditions continued across all our segments. This included a broad-based slowing of demand, intense competitive forces and persistent inflationary pressures.”

When the Reserve Bank of New Zealand (RBNZ) cut its official cash rate (OCR) by 50 basis points in February to 3.75%, it admitted that economic activity in New Zealand remains subdued. However, it added that: “Economic growth is expected to recover during 2025. Lower interest rates will encourage spending, although elevated global economic uncertainty is expected to weigh on business investment decisions. Employment growth is expected to pick up in the second half of the year as the domestic economy recovers.” Mark Malpass at Steel & Tube likewise has some optimism: “While we expect the market to remain challenged for the next few months, the cycle appears to have bottomed out, and we are seeing increased customer enquiries and tenders as business confidence starts to improve. Activity is expected to start building momentum from mid-2025 (1H26) and we are well positioned to navigate the current weaker cycle and achieve material earnings growth as market activity returns. There is a substantial pipeline of work ahead and Steel & Tube is well positioned to capitalise on this.” Robin Davies at NZ Steel also anticipates improved demand in building and construction. “I think a rebound would be a strong word to use. I think a slow recovery…maybe the second quarter this calendar period on the back of the interest rate reductions and that restores some confidence,” he said. From Fletcher Building´s point of view, Andrew Reding commented that some tentative signs of improvement began to appear post the first OCR cut late in 2024, with sales up 17% between September-December 2024, as compared to July-August 2024.

As a sign of its belief in the future, Steel & Tube has conditionally acquired Perry Metal Protection, Perry Grating and Waikato Sand Blasting. Together they form New Zealand’s leading corrosion protection and treatment experts, as well as being a leading supplier of grating products centred around high quality commercial and industrial applications. The total acquisition price was $43.5 million, with the possibility of an additional payment of up to $6 million based on the financial performance of the assets over the 2-to-3-year, post-acquisition period.

Perry Metal Protection is New Zealand’s leading corrosion protection and treatment provider with a 44% market share in hot dip galvanising – the process that coats metal with zinc to protect it from corrosion and oxidation. The grating business is primarily used for industrial and commercial construction, while Waikato Sandblasting provides high quality blasting services on a wide range of items, including structural steel, heavy equipment and vehicles. The Chairperson of Steel & Tube, Susan Paterson, has publicly commented that the current market conditions are continuing to present attractive merger and acquisition opportunities.