Steel and Tube braces for slowdown

A slowdown in residential construction is likely to slow Steel and Tube Holding's growth, says the company's chief executive.

Nick Calavrias told shareholders at the company's annual meeting in Wellington yesterday the slowdown would "eventually affect the demand for steel products ... and other manufactured items such as whiteware and furnishings that are required to build a house or to furnish it".

Meanwhile, steel prices have softened as global steel manufacturers sell inventory. However, Calavrias said industry forecasts were that prices would recover in the mid-term as world demand once again lifted.

While steel volumes were slightly ahead of the same period last year, it was difficult to forecast accurately what effect several factors, including the slowing economy, could have on the company's profitability.

Steel and Tube, half-owned by OneSteel of Australia, would be on track to post another "solid result" this year if there was no significant change to the economy or further volatility in international steel prices.

Its annual net profit hit a new high in August, rising 27 per cent to $36.1 million. Revenue hit a record $438 million.

At the time, the company said a 30 per cent increase in commercial construction more than offset the residential slowdown. New housing consents were down 16 per cent last year.