Fastener prices set for sharp rise

A small number of powerful mining companies, together with the major steel players have savoured strong profits over recent years and are intent on holding on to them.

Phil Matten, the Editor of Fastener and Fixing magazine, told a forum at the recent Fastener Fair Coventry that he could see costs across the range of standard steel fasteners being 40% to 60% higher than 2007 levels within a matter of months.

With cold heading wire prices in Europe set to increase dramatically within weeks - one forum participant confirmed that Eur 250 per tonne would be added to his production costs in July, and Asian raw material costs continuing to ramp up, Matten saw little sign of inflationary pressures abating.

The main contributors were steeply increasing steel prices, driven by extraordinary increases in raw material costs across the world.

Iron ore contract prices, for example, increased year on year by at least 65%.

The cost of coke, an essential ingredient in steel making, has increased by as much as 200% compared to 2007.

Matten went on to detail the impact of bulk sea freight, currency exchange trends, as well as energy and labour costs on the prices of finished fastener products from Asian and European sources.

While current circumstances were exceptional and some level of correction was inevitable, if very difficult to predict, Matten argued that a long-term inflationary trend for fastener products appeared an unavoidable reality, leaving the supply industry and its customers no choice but to come to terms with it.

Consolidation meant a more structured steel market, more specialisation, a tighter balance between supply and demand and more robust market pricing, he said.

A small number of powerful mining companies, together with the major steel players have savoured strong profits over recent years and are intent on holding on to them.

The prospect that the European Commission may, within a matter of weeks, apply antidumping tariffs on an extensive range of fasteners from China, threatened to further exacerbate the situation, the forum audience was told.

A protracted EU investigation, which started in November 2007, has led to growing uncertainty for fastener importers as the 9th August 2008 deadline for a decision on preliminary antidumping tariffs draws nearer.

Depending on investigators' interpretation of one of the most complex antidumping cases addressed by the EU, the application of tariffs could, quite feasibly mean fastener prices doubling year on year, according to Matten.

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