Insight

A review and preview of the global fastener market

Named after the Roman god who is often depicted as having two faces – due to its ability to look to the future and to the past – the Janus Perspective is a unique feature that includes a wide cross section of global fastener business leaders, who have all contributed their retrospective of 2021 and thoughts on prospects and challenges for 2022.

Dr Florian Seidl, CEO

What a year! Out of the deep, the Covid-19 crisis recovered with rapid speed, combined with huge price increases, anti-dumping taxes and a lot of problems on the supply side. Never in my 46 years in the business have I experienced such an accumulation of extremes.

Yes, we had crises, but they were not as heavy as the Covid-19 crisis. We’ve previously had high inflation rates but not so high as 2021 with several waves of increases up to 30% to 40% – especially with our products. We’ve also never had such problems to fulfil the demands of our customers.

The backlog with our customers were at a rate of around 1% for years now – which means that from 100 lines, 99 can be fulfilled. This grew up to 3% or 4% in the past months – due to a number of factors including: The supply from Asia being a huge problem; the reduced capacity in production, which did not speed up in time; as well as arguably the most difficult problem, which was the transport of goods.

The prices for containers from Asia to Germany were eight times higher than one year ago. There was also a lack of capacity, with there not being enough containers in Asia – meaning there were a lot of ships waiting at Asian harbours. There was also the ship that blocked the Suez Canal for several weeks. Air freight costs also increased immensely because of Covid-19, as there were no passenger flights to Asia or America.

To add to this there were problems with the supply of steel and wood, but especially of semiconductor chips, which are used in a lot of industries. The automotive industry for example did not get enough chips, which meant they could not produce cars for weeks. We felt this as well. Without the automotive industry – we serve OEMs as well as 1st and 2nd tier suppliers – our turnover would have risen much more than it did.

One thing is quite sure, for the first six months of the new year, we will still have a very high demand. The order books in many industries are full, a lot of cars have to be manufactured and sold, and they need a lot of fasteners. Because of the low interest rates, the construction industry is on the limit of its capacity. Machinery companies are earning money again and therefore ordering machines, which means the machine industry has very full order books. Even private consumption is higher, because governments gave a lot of money to the people, which they could not spend (i.e for holiday travels), so they have enough money to buy things now.

With all these factors, prices will be high or will even go up in the first six months of 2022. Our sales guys – most of which are quite young – of course have never had the experience to press huge necessary price increases in the market. For years, prices were quite stable or rather sinking. Where previously it was not so important if you reacted too slow or too soft, now you have to react faster and be harder, otherwise companies will lose a lot of money.

The only experience we had before was with the anti-dumping duties. If the anti-dumping duties on certain carbon steel fasteners goes ahead, which we deeply hope it will not, these problems will only get worse and the supply problems will increase.

The huge question mark really is: What happens after that? Maybe the supply side will fully recover; maybe transport will work itself out and start to run smoothly again; maybe there will be enough raw material on the market. If this happens then the prices could go down. But maybe the prices will go up again because of rising wages and political problems, which cause interruptions on the supply side? Anyway, it’s a very thrilling time and it’s a big challenge for our whole branch to be successful in these times. But when the going gets tough, the tough get going.