Domestic demand for steel has likely reached the bottom, says NZ Steel. Photo:
- NZ Steel half-year underlying profit down 88 percent
- The company owns the Glenbrook Steel Mill, south of Auckland
- Chief executive says sales haven't been this weak since the 2008-09 Global Financial Crisis
The owner of the Glenbrook Steel Mill saw its half-year earnings plunge amid softer steel prices and weak domestic demand from the building and construction sector.
New Zealand Steel's underlying profit fell 88 percent to $3.1 million, from $25.5m a year ago. Its revenue was down 14 percent to $427.8m.
NZ Steel - part of Australia's BlueScope Steel - said domestic steel sales volumes were also down 13 percent, while export volumes increased, but weaker prices due to global oversupply from China limited financial returns.
NZ Steel chief executive Robin Davies said domestic demand for steel had likely reached the bottom.
"But it's certainly probably at GFC [global financial crisis] levels for steel demand in New Zealand. I've been in New Zealand Steel now for just over 17 years at it's the weakest demand I can remember in that time," he said.
Davies was "reasonably optimistic" about a recovery this year as interest rates were reduced, likely leading to 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.
Davies was hopeful the government's fast-track approvals process could also help improve demand.
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