5/14/2010
NEWS BRIEFS
Report: Supply Costs Driving Fastener Price Increases
The European fastener industry is once again facing a concatenation of supply side issues conspiring to drive costs up at a rapid rate, reports Fastener + Fixing Magazine editor Phil Matten.
For 40 years major steel companies have negotiated annually with three huge mining groups that control 70% of the world’s iron ore.
“Last year, after protracted and often tense negotiations, China failed to reach agreement on an annual contract,” Matten writes.
Along with iron ore, coking coal prices have also increased substantially.
Then there’s the scrap issue.
“Recession means less consumption and therefore less scrap generated.”
“European scrap is now reportedly being imported by the U.S. for the first time in 20 years” as the U.S. has exhausted its domestic scrap supply, driving European scrap prices up nearly 90% over the past year.
Since cold heading wire rod is such a small part of total steel production, any cost increases are applied “with short notice and minimal opportunity for negotiation. It’s a take it or leave it world for the fastener producer when it comes to wire.”
In late March “European fastener makers were given a matter of days notice of massive increases in the cost of cold heading wire. Italian fastener factories reported increases ranging from EUR 80 to EUR 150 per tonne.”
Likewise, the increase in the cost of Asia to Northern Europe container freight costs over the last year has been “quite frightening,” with figures rising nearly 175% from January 2009 to February 2010.
For the full report, visit FastenerandFixing.com. ©2010 GlobalFastenerNews.com and Fastener + Fixing
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