New Zealand is coming under increasing inflationary pressure (up 3.3% since June 2020) as the economy continues to surge. The housing sector in particular is seeing significant price increases, with Auckland now being one of the least affordable cities to purchase a house (relative to GDP) within the OECD.
Consumer spending is also strong at present, perhaps due to the country being essentially cut off from most overseas travel. Immigration into New Zealand is also very challenging, resulting in labour shortages across a number of sectors. It is widely expected that the Reserve Bank of New Zealand’s Official Cash Rate will increase as early as next month in an attempt to control this inflationary pressure.
Most scrap metal merchants are reporting regular volumes for July, which is historically a slightly quieter month. Consumers are still buying in the current market, and both consumers and merchants are battling with supply chain issues with regards to freight.
The Australian housing market is also up 16% so far this year as the economy continues its recovery. The emergence of some cases of COVID has resulted in lockdowns in both New South Wales and Victoria impacting on the New Zealand/Australia travel bubble, but the rest of the country is carrying on as before. Metal merchants and consumers are reporting similar volumes and consumption requirements to their counterparts in New Zealand and are also battling the same supply chain issues.
Hayes Metals (NZL), Senior Vice-President of the BIR Non-Ferrous Metals Division