Increasing Costs Drive Up Steel Price

June 26, 2007

Increasing Raw Materials and Volatility in Scrap Metal Costs Drive Up Prices of Reinforcing Steel and Wire

Pacific Steel has advised its customers that it will be increasing prices of reinforcing steel and wire by about five per cent, effective July 1, 2007.

Over the past three months, Pacific Steel has continued to experience volatility in world metal prices. Scrap metal prices have remained at their historic high levels and finished goods prices have continued to rise.

External factors beyond Pacific Steel’s control such as significant increases in input costs including additives, raw materials and labour have contributed to this increase. In addition, freight providers are also seeking rate increases based on rises in fuel and compliance costs.

“During the past three months the Chinese Government has announced a number of changes that place higher tax levels on steel exports. This has increased prices out of China with a subsequent flow-on effect to other markets. South East Asia steel prices have risen sharply during this period,” said John Beveridge, general manager of Pacific Steel Group.

“Due to the volatility in the market at the moment, we’re advising our customers to be cautious in locking in long-term pricing with their customers. We will continue to provide as much price certainty as we can through quarterly pricing. We’re keeping a close eye on the situation and are committed to keeping our customers informed.”

The increase in the price of New Zealand-made steel and wire is consistent with the global trend of increasing prices of imported products which currently sit at all time highs.

Pacific Steel operates the world’s most environmentally friendly steel mill at its Otahuhu site where 250,000 tonnes per annum of scrap metal is recycled into reinforcing steel for the construction industry and galvanised wire for the rural market.

ENDS

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