17 Nov 2014

Steel manufacturer predicts profit lift

7:16 am on 17 November 2014

Steel & Tube Holdings is expecting a higher first-half result than last year, mainly because the fall in the New Zealand dollar is offsetting subdued international steel prices resulting from too much capacity globally.

The steel distributor reported a $7.3 million net profit for the six months ended December last year.

Managing director Dave Taylor said the drop in the local currency meant all steel distributors had had to raise prices.

He said while the steel industry was competitive, no one could afford to take the additional cost without passing it through to their end customers.

Mr Taylor said the excess capacity was coming predominantly from China, which had invested heavily in steel manufacturing over the last 15 years and now produces about 50 percent of the world's steel.

"That excess capacity, which is not taken up by the domestic demand, ends up as export into the world market and that suppresses prices generally."

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