Consequences of the Rapidly Changing Market

COVID-19 has changed the world. We experience its impact every day, both professionally and personally. In addition to COVID-19, there are several other factors influencing the turbulent world in which we live.

As a specialist in fasteners, we closely monitor developments in the market. Below, we highlight the most urgent developments driving change and uncertainty across the industry:

Raw material prices and the associated long lead times
Product shortages, insufficient production capacity and anti-dumping duties
Sea freight and transportation costs
Energy prices and rising inflation
Packaging costs

Raw Material Prices

As you are probably aware, raw material prices have increased significantly since the start of the COVID-19 pandemic. The production of raw materials was substantially reduced at the beginning of the pandemic, and as the global economy began to recover, supply was unable to meet demand. As a result, lead times for raw materials and finished products from Asia increased considerably, driving up costs across a wide range of industries.

Product Shortages, Insufficient Production Capacity and Anti-Dumping Duties

The uncertain situation in 2020 relating to COVID-19 led to understandable caution across many industries. Stock orders were postponed, maintenance activities were delayed, and production capacity was reduced. This scenario also unfolded among fastener manufacturers worldwide. This cautious approach has affected product availability in the market and, consequently, the pricing of fasteners. The European Commission's announcement of anti-dumping duties (ADD) on a range of steel fasteners imported from China further worsened the situation.

European fastener distributors are effectively being forced to actively seek alternative sourcing channels. This shift had already begun in 2018, when American companies started looking beyond China for supply sources due to increasing trade tensions between the United States and China. As a result, order books at Asian manufacturers outside China were already heavily committed. Particularly during the first half of 2021, many European distributors followed the same route, and the limits of production capacity outside China were quickly reached. Considering that China accounts for approximately sixty percent of global bolt production capacity, this underlines the urgency of the market situation, where product shortages and insufficient production capacity reinforce one another.

The European Commission’s announcement concerns duties ranging from 22.1% to 86.5% on steel fasteners. The expected implementation date of the anti-dumping duties was 17 February.

For more information, please visit the European Commission website.

(Sea) Freight

The effects described above relating to raw materials, product shortages and insufficient production capacity are being further intensified by a shortage of sea freight capacity. This shortage is being exacerbated by a lack of handling capacity at Europe’s main ports and recent events affecting maritime transport, such as the disruption in the Suez Canal. The COVID-19 pandemic has disrupted global goods flows and the associated movement of shipping containers. As a result, sea freight rates have increased dramatically and container capacity has become more limited.

In addition, transport providers are tightening their terms and conditions, requesting advance payments and shortening payment terms.

Road transport across Europe is also experiencing price increases. This is linked to rising fuel costs and growing capacity challenges related to driver availability.

Energy Prices and Rising Inflation

Due to ongoing market dynamics and global developments, energy prices and inflation have increased significantly, which is also impacting the prices of fasteners. Please refer to the charts illustrating these developments.

Packaging Costs

There is currently a global shortage of raw materials and production capacity for paper and cardboard products. This has been causing significant price increases and extended lead times for packaging materials for some time. As the economy continues to grow, it is expected that this situation will persist throughout the year.

Fabory Does Not Compromise on Its Stringent Quality Standards

From the moment the European Commission announced its anti-dumping investigation, Fabory began redirecting its purchasing orders towards suppliers outside China. Thanks to our local sourcing and inspection teams, as well as many years of experience working with non-Chinese manufacturers, we were able to engage alternative suppliers for most products within a relatively short period of time. In addition, we actively manage our inventory levels. Product availability and customer service remain our highest priorities.

Although these measures reduce Fabory’s exposure to potential anti-dumping duties, they also result in higher procurement costs for our products.

Due to the ongoing and increasing pressure on the market, we advise all customers to review their inventory levels carefully in line with their production planning requirements. We are happy to support you in this process. Please contact your account manager or our Customer Service team. We are ready to assist you.

We remain your trusted partner in fastening technology, providing the products, solutions and services you have come to expect from us.

Our specialists continue to closely monitor developments in both the investigation process and the market. This enables us to keep you informed of the latest news and the potential impact on the fasteners concerned. Please continue to monitor this page for important updates.