Steel reinforcing bar and mesh is about to run short in New Zealand, an industry leader says - but the CEO of one of the industry's major players challenges that prediction.
Building Industry Federation chief executive Julien Leys said 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.
But Mark Malpass, chief executive of NZX listed Steel & Tube, 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.
Leys said information he had was firm that supplies were about to run out: "This could affect the entire country. Most jobs rely on reinforcing steel and mesh."
New Zealand's steel supply would be so short from next week that the impact of the shortage would be felt, he said.
That supply crisis could last four weeks, further delaying jobs already stopped for five weeks from level 4 lockdowns on all but critical construction activity.
Most steel mesh is made in New Zealand but capacity here is constrained and trouble importing steel from China has caused the trouble, Leys said.
"It will take about a month to get more supplies from overseas," Leys forecast.
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.
A survey last December found that about six out of 10 home building projects in Auckland were hit by problems with material and/or equipment availability, Stats NZ said.
Leys said the crisis was caused by a slow-down in steel production from China due to that country suffering an energy crisis because of coal supply disruptions.
"Coal powers much of China's energy sector and that means they asked for manufacturing base to reduce production by around 20 per cent and that, of course, has meant less steel and building materials are being made.
"Add that onto the existing shipping delays from Asia and there's less product coming here at a time when there's enormous demand across New Zealand, including from big infrastructure products.
"You can't put down a concrete slab unless you have mesh," Leys said.
"It's just one of the unforeseen consequences of the global disruption we're seeing," he said.
He was told about the issue by a construction sector boss. That person preferred not to be quoted directly, he said.
The federation's board includes leaders from across the sector: Jason Bardell of IBS, Mike Guy of Carters, John Gardiner of Building Assurance, Bruce McEwan of PlaceMakers, Jerry Friar of James Hardie, Stan Clark of NZ Steel, Ed Scorgie of Chapman Tripp, Phil Vodanovich of Dulux, Mike Edwards of SIKA and Robert Watson of CRS Building Supplies.
Last month, the Ministry of Building, Innovation and Employment said the sector is one of the largest national employers and has been a major contributor to New Zealand's economy this past year.
About 275,600 people work in construction-related employment and construction has been the industry with the greatest increase in jobs since the beginning of the pandemic, MBIE said.
Stats NZ says consents have been issued for around $26b worth of work in the latest year.
MBIE found 67,239 enterprises in the sector, building consents at record levels and a steady pipeline of work.
Four months ago, BRANZ's Build Magazine cited timber and glass shortages affecting construction but said then : "Steel has not been caught up in supply chain problems to the extent that timber has."
It cited steel mills in New Zealand owned by NZ Steel and Pacific Steel.
"NZ Steel products include beams, roof cladding and light steel framing. Pacific Steel manufactures wire rod, reinforcing bar and coil products. Big civil projects using other steel products have longer lead times and more extensive planning," the magazine reported.
"There are five roll-forming companies in New Zealand using sophisticated technology. Almost all steel roofing installed here is manufactured in New Zealand. There is surplus capacity in the steel industry," the magazine said in June.
Comment has been sought from Fletcher Building and Steel & Tube.