Pacific Steel to put up its prices

The weakening dollar is already pushing up import prices, forcing Fletcher Building subsidiary Pacific Steel to increase the price of its products.

Pacific Steel, the country's only manufacturer of reinforcing steel and fencing wire, said it would put up prices 10 per cent from next month in a move partly driven by the exchange rate but also caused by increasing zinc and scrap-metal costs.

General manager Alan Pearson said the 10.5 per cent fall in the exchange rate since last November and rising raw material prices internationally made the move inevitable.

Zinc prices had risen 65 per cent since October last year.

World scrap-metal prices had increased 5 per cent last month alone and reinforcing steel prices were up 4.5 per cent to 11 per cent in the past month, Pearson said, citing steel industry monitors.

"When coupled with the exchange rate movements, we feel our increases are conservative," he said.

The price rise will particularly hurt the rural, infrastructure and commercial construction sectors.

Reinforcing steel is used on bridges, dams, wharves and in high-rise buildings and the wire is used for fencing.

New Zealand Steel also announced a price increase last week, saying charges for its flat metal products would rise about 2 per cent.

Pacific Steel is New Zealand's only manufacturer of reinforcing steel.

Demand runs at about 100,000 tonnes of reinforcing steel annually, of which Pacific Steel supplies about 80,000 tonnes. The rest is imported from Singapore, Malaysia and Thailand.

Pacific Steel is the country's only manufacturer of fencing wire and owns the Wiremark brand. Its reinforcing steel is marketed under the Seismic brand.

Fletcher Building building products chief executive Andrew Reding said yesterday it was important to remember the falling dollar would hurt some sectors but benefit others.

"It's inevitable if you have falling exchange rates, imported products cost more but exports will do nicely," he said.

Steel prices remained extremely volatile.

In the latest half-year result out last month, the building products division did not fare as well as it had in the June full year.

Fletcher chief executive Ralph Waters blamed falling steel prices and softer demand in the Australasian building sector for drops in earnings from two of the company's four major divisions in December half-year earnings.

It was reported last month that results from the building products and distribution divisions were down.