Global Fastener News

2008 FIN – Witucki: Global Credit Crisis Impacting Steel

January 16
00:00 2015

November 18, 2008 FIN – Steel is feeling the crunch of the global financial crisis, Nucor Fasteners general sales manager Jim Witucki told attendees of a Western Association of Fastener Distributors seminar at the National Industrial Fastener Show/West in Las Vegas.

“It’s having a very real impact in the steel industry,” Witucki stated. The global steel industry is tight, though it could see capacity weaken for the next five years through 2012, Witucki noted at the “U.S./Asian Fastener Market Trends” conference sponsored by WAFD.
Witucki said that steel demand in North America is expected to be “anemic,” though demand in Mexico is expected to grow faster than the U.S. Some analysts project that U.S. capacity could drop 25% within a year, he noted.
The downturn comes at a time when global steel demand, for only the third time since 1900, appears to be in an extended period of substantial growth, he commented.
“We’re not exactly Exxon Mobile, but steel has done pretty well since 2004.”
But don’t expect Nucor’s fastener prices to suddenly decline. Witucki said steel accounts for roughly 50% of the cost of the fasteners Nucor manufactures. The other half consists of wire processing, pickling, annealing, heat treatment, and final inspection – all costs that remain high.

Darling: Steel from China Rivals Taiwan Prices
At the conference Witucki was joined by Bruce Darling of Porteous Fastener Company, who complimented those in attendance. “Being in this room means you’re a survivor; maybe the walking wounded, but you survived,” Darling quipped.
Darling noted Asian steel prices are declining as inventory begins to grow.
“The gap between the steel prices of China and Taiwan is growing smaller,” mostly due to the common sources for iron ore and other raw materials.
Historically, steel from China was about 22% cheaper than Taiwan steel.
Predicting price fluctuations is being increasingly difficult, Darling stated, noting that “some greed has come into steel prices in the past few years.”
“We see steel mills continuing to raise prices at a time when consumption remains slow. Fastener prices are beginning to come down because of steel surpluses and factors other than steel.” Darling said customers who watch steel prices are asking for the ‘cheap stuff’ when it comes to fasteners, but inventory made from lower-cost steel is “90 days away,” he reminded attendees.
Darling commented on the federal “10+2” rule, which goes into effect January 1. However, regulations for the rule have yet to be published, he said.
The U.S. Customs & Border Protection regulation requires specific cargo information for shipments bound for the U.S. The “10+2” rule would require importers to make an “Importer Security Filing” with cargo information before entering U.S. ports.
Information must be filed at least 24 hours in advance of containers being loaded on vessels in foreign ports. The data elements are: Names and addresses for Manufacturers, sellers, buyers, ship-to and consolidators; stuffing location in container; importer of record; products’ country of origin; and commodity tariff code number.
The carrier must also provide CBP the location of containers and container status messages daily on certain specified changes in container status.
Darling disagrees with the government’s estimate that the new rules will add seven days to the shipping process. “We’re talking two weeks of delays.” ©2008/2015 Fastener Industry News.
For information on permission to reuse or reprint this article please e-mail: FIN@GlobalFastenerNews.com

Darling at WAFD: Steel Up Again for 4Q

October 21, 2008 FIN – After a 20% third quarter hike, steel prices in Taiwan are up another 4% for the final quarter of 2008, Bruce Darling told the Western Association of Fastener Distributors. Prices in China actually dropped 7.5% this quarter after a 22.7% increase in the third quarter.
The cost of steel represents 62% to 65% of the cost of a fastener.
Current inventory on distributors’ shelves in North America is probably based on 2007 steel prices of $564 per ton in Taiwan and $460 to $640 in China, noted the vice president of materials for Porteous Fastener Company.
This quarter’s steel price in Taiwan jumped to more than $1,014 per ton, compared to $844 in China.
At a time when steel fastener prices are rising, brass, nickel and moly are down, indicating stainless steel and brass fastener prices may be steadier.
In addition to the cost of steel, the “usual suspects of energy and transportation” are increasing imported fastener prices, Darling pointed out. A steel furnace being offline for 45 days in Taiwan adds to price pressure, as does the weak U.S. dollar.
Taiwan steel prices are up 80% since the second quarter of 2007 and China is up 83%. That represents a 49% increase in the cost of fasteners from China.
Asian mills had to pay 65% more for iron ore from Brazil this year and Australia’s iron ore practically doubled at 96%.
“It is a difficult time to determine what to expect next,” Darling said. “We see steel mills continuing to raise prices at a time consumption remains slow. Fastener prices are beginning to come down because of steel surpluses and factors other than steel,” Darling observed.
He noted the cost of fuel is coming down, electricity increases have been postponed in Taiwan, while steamship companies report vessels are not full and spot rates are decreasing.
Despite the increases, Darling advised distributors to buy mill product, but “not buy big extra quantities. You’ve got to buy to have stock to serve your customers.” ©2008/2015 Fastener Industry News.
For information on permission to reuse or reprint this article please e-mail: FIN@GlobalFastenerNews.com

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