Steel products not about to run out but delivery lead times jump to four months

Lead times for delivery of many steel products have jumped from six weeks earlier this year to 12 to 16 weeks now but New Zealand isn’t about to run out of much of the product, a boss says.

Robin Davies – chief operating officer of New Zealand Steel which is owned by BlueScope and general manager of Pacific Steel which manufactures rod for mesh – allayed fears about an imminent supply crisis.

But he acknowledged critical supply shortages of mesh and said high demand from record residential building activity, combined with the pandemic, were certainly leading to much longer lead times.

“Six months ago, lead times were around six weeks. Now, they’re more like 12 to 16 weeks,” Davies said today.

His comments follow those from Julien Leys, chief executive of the NZ Building Industry Federation, who said today some steel products will run out this week.

Leys said steel reinforcing bar and mesh is about to run short in New Zealand. Work worth billions could be frozen due to a lack of steel caused partly by lack of Chinese imports as well as lower production levels within New Zealand, he said.

Davies acknowledged that some steel products can’t be delivered for up to four months.

“But as long as they are ordering well in advance, they can be supplied. We’re not running out. We’re making steel 24 hours a day, seven days a week at Glenbrook.”

Davies stressed his comments didn’t relate to steel mesh because that was not supplied by New Zealand Steel at Glenbrook or Pacific Steel at Ōtāhuhu.

His comments related to other steel products including plates, rebar, reinforcing rods, galvanised products.

New Zealand Steel operated at a reduced level during alert level 4 but continued.

“We were able to run while the market was closed. We had authority from the Government,” Davies said.

“But a large percentage of New Zealand manufacturing was shut down, particularly mesh making. That stopped for up to five weeks and that’s compounded that shortage of that product.”

He backed comments from Steel & Tube chief executive Mark Malpass that supply was “extremely tight but not running out. The industry is running at good levels although there is supply chain tightness”.

Pacific Steel manufacturers the rod that goes into steel mesh.

One of the issues with the alert level 4 lockdown was that nearly all New Zealand-made mesh is manufactured in Auckland but building continued in other parts of New Zealand, Davies said.

“There have been strong levels of demand for mesh. We’ve had all these weeks of level 4 lockdown.”

Leys was representing a number of members of the building supply industry and some were companies that are dependant on imported goods, Davies said.

“That’s far more challenging. That’s not a steel issue particularly,” he said, citing port issues, logistics challenges and freight costs dogging other materials in the construction sector.

Malpass said: “There’s no question there’s been tight supply out of Asia for some time but that’s beginning to open up. Steel reinforcing mesh is not about to run short. It’s tight but it won’t run out.”

Reinforcing bar supplies were also limited, Malpass said, adding that people needed to order well ahead of time.

“We’re advising customers to play ahead of longer lead times,” Malpass said.

Steel & Tube is one of New Zealand’s largest steel businesses. It distributes and supplies steel reinforcing mesh and cut-and-bend reinforcing steel throughout New Zealand.

An industry source said local businesses provided raw materials for steel mesh and bar but lockdowns had disrupted that work.

“Between level 4 lockdowns and lower output at level 3, there is a significant delay on rolling schedules that affect these products. This is resulting in significant stock-outs, meaning we will not be able to fulfil all demand for HD12 rebar and SE62Res mesh between now and the end of October, with ongoing supply post-October being limited. We would therefore ask for your understanding if we limit the amount of product we are able to supply to you,” the industry leader said.

Leys said spring was when many concrete slabs are poured but without steel mesh, this part of the construction process will be put on hold, he said.

Stats NZ said builders said that in addition to lockdown, house construction delays were due to decreased stocks of some building products and delays in shipping materials into New Zealand.

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