KEY POINTS:
A Fletcher Building division has issued a warning about the cost of steel and has forecast a big price rise.
Pacific Steel has told its customers the price of its reinforcing steel and wire products would rise "considerably" in the next few weeks. The company said a rapid rise in the cost of scrap metal during the Christmas-New Year break had resulted in the price of a tonne of scrap steel rising from US$380 ($490) last month to US$480 this week.
That jump of more than 25 per cent would take steel to unprecedented price levels, the company said, and had been caused by booming demand for steel in India and China, a revived demand in Southeast Asian countries and a tightening of the supply of scrap metal from large sources such as Russia.
Pacific Steel's products are made from New Zealand-sourced recycled scrap metal, but the price is set by the international market.
John Beveridge, Pacific Steel Group's general manager, said many customers here might be unaware of the sudden volatility in the global scrap metal market because of the speed of the price rise during the holiday period.
"We have never seen such a boom in steel commodities and it seems to be sustained across all markets globally," Beveridge said.
And he warned prices could rise further.
Building, construction and rural sectors would feel the impact most, he said.
Fletcher Building's shares have dropped sharply this year in a declining market. Yesterday they closed at $10.20, down from $11.50 on January 1.
