Fastener Prices Head Up on Increased Demand and Steel Hikes

April 01

00:00 2010

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FEATURE

Bruce Wheeler of Star Stainless and
Barry Porteous of Porteous Fastener Co. speak at Pac-West

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Take a look at your inventories, your customers’ need and “buy now,” importer and master distributor Barry Porteous of Porteous Fastener Co. advised distributors participating in the Pacific-West Fastener Association spring conference.

Porteous noted that steel in Taiwan peaked at $800 to $875 and is now in the mid $700 range and “headed back up to low 800s.”

Bruce Wheeler of Star Stainless Screw noted stainless steel fastener prices have already jumped more than 20% in recent months. He estimated the price would go up another 12% to 15% by the end of April.

“The pipeline is leaned out,” Wheeler described inventories at all levels of the supply chain from raw materials to steel mills to distributors and OEMs. “Lead times are longer. Stainless steel is requiring five weeks vs. two weeks just six months ago. They are now quoting for August shipments to arrive in October.”

How high will stainless prices go? “It depends on demand,” Wheeler responded. “At some point in time prices will have to hit the top.”

Porteous said domestic producers he has talked to “want to raise prices. They are just waiting for the competition to go up.”

The demand in China, India, the U.S. and Europe drove up steel prices in 2007-08. Scrap steel was selling for as high as $800 a pound. All levels of the supply chain were building up inventories until October 2008.

“In November 2008 the market fell off the cliff,” Porteous recalled. Just since the beginning of 2010 “we are starting to see a bit of turnaround.”

In addition to increasing demand for product, now there are fewer suppliers of iron ore, coke, coal and steel, Porteous noted. Components of making steel are scarce and the prices are headed up.

Taiwan’s China Steel Corp. traditionally announced quarterly prices well in advance. This year a few weeks in advance they are giving two month price, Porteous noted. And recent announcements have prices going up 5% to 18%.

There are shortages of fasteners made in Asia for OEMs and MRO customers and after more than a year of reducing inventories, distributor stocks are low, Porteous explained.

Wheeler said stainless steel is headed up as nickel, molybdenum and copper have all jumped in price on the London Metal Exchange. Nickel was at $4 a pound a year ago and this month hit $10 despite high inventories in relation to demand; copper was $1.70 and is now $3.40; and moly rose from $8 a year ago to $17 currently.

Wheeler pointed out that brass fasteners are 62% copper and bronze fasteners are 96% copper.
Stainless wire producers “are struggling to keep up with demand.” One mill has shifted to the more profitable carbon products.

Wheeler advised Pac-West fastener distributors to “look at what you need for your customers going forward. Cover yourself.” But he cautioned against “panic buying,” which creates an artificial demand.”
He hopes stainless steel inventories will build back up later this year.

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