Market conditions remain challenging in both Australia and New Zealand amid bearish sentiment, difficult/expensive shipping and a softening of demand. In theory, the energy crisis in Europe should have little bearing on metal merchants and consumers in Australia and New Zealand. In practice, however, weaker demand for base metals in Europe, increased fuel prices and inflation are causing ripple effects globally.
Inflation in New Zealand is now at 7.3% and the Reserve Bank’s official cash rate is continuing to climb in a bid to combat this; indeed, this rate is not expected to decrease until at least the fourth quarter of 2024, and the fear within the business community is that it will stay too high for too long. Coupled with social policy providing greater sick leave entitlement, more compliance costs for businesses with migrant workers and an acute labour shortage, this is making New Zealand’s economic landscape very complex.
By and large, shipping to traditional offshore markets is not showing any signs of respite either. Overall, metal merchants and consumers in New Zealand can be forgiven for not being optimistic at present.
Economic problems in Australia are less acute but still very challenging: inflation is a little lower at 6.8% and analysts are predicting that the official cash rate will not decrease before the first quarter of 2023. Shipping and supply chain issues have also had a real impact on metal merchants in Australia, as has the softening of commodity prices on related industries.