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.

By John Wolz, editor, GlobalFastenerNews.com

What is happening in the North American fastener market can be summarised by comments from three panelists at the autumn 2021 joint conference of the Southwestern Fastener Association and Pacific-West Fastener Association.

Panellist Tim Roberto of Star Stainless Steel declared: “Just in Time is dead”, with the three panelists agreeing shortages and strong market will continue well into 2022. Danielle Riggs of Würth Logistics told the conference: “Relief will not be until 2023, at best.” Whilst Mike Bailey of Nucur Fasteners commented: “All signs are that the market is strong.”

The panelists’ comments indicated what they – and the industry - are seeing.  All three panelists emphasised: “partnerships” as important in the current market. Who will gain? Long-term good customers who have developed partnerships with suppliers. Who will suppliers ignore? Those past customers who bought only now and then when they could get a cheap price.

In a separate panel programme Michael Selman of Beta Steel, Beneke Wire, and Monarch Metals, predicted to the National Fastener Distributors Association that “2022 is going to mirror 2021 from a supply point of view”. Freight remains a major issue exacerbated by a shortage of truck drivers, Selman said. “Don’t expect a market shift now that the White House has replaced the 232 tariffs with steel quotas for the European Union,” Selman added. “Lifting the 232 tariffs will not have a huge effect on the market,” he explained.

Cold heading quality steel (CHQ) is generally available at higher prices, though the delivery wait has doubled to eight weeks. That delay has extended customer deliveries to 14 to 16 weeks. To survive the current conditions, Selman advised distributors to “stay strong with your suppliers”.

Shipping rates have gone up 500% or higher (up to 1,000% based on destination), according to Chris Donnell, national sales director for Scanwell Logistics International.

In 2022, the Chinese New Year and the upcoming Beijing Olympics may push rates higher, Donnell told the NFDA. Currently, carriers are ignoring any pricing structure agreements signed before the shipping season. “Before the pandemic, ocean carriers were losing money, so now they’re trying to make as much as they can,” Donnell explained.

In 2022, ports will begin charging a US$100 storage fee to ocean freighters after 7 days for freight in port; that rate increases US$100 every day after that, with freighters saying they’ll pass those costs on to customers, Donnell pointed out.

Frustrated with ocean freight, some importers are switching to air freight. There are also truck shortages, particularly with ports not letting drivers return empty containers, tying up trucks for days before they can haul full containers, Donnell mentioned.

It is estimated that there is a one million truck driver shortage nationwide. “Economists now see 2026 as when there will be enough drivers to handle domestic freight,” Donnell said.

Mike Bailey of Nucor Fasteners commented that US manufacturers and distributors are looking for domestic suppliers. Domestic producers are responding, Bailey added. Nucor just acquired an existing state of the art coil processing facility in Shelbyville, IN, where four new National bolt headers will be installed and begin operating in 2022.    

Supply chain problems start with raw material

“Vendor/supplier partnerships will remain critical,” Bailey emphasised. What Nucor does sell will focus on what customers need most, he added. Star Stainless president Roberto pointed to a weaker US dollar, plus nickel rising 30% and copper 40%, for stainless steel fastener price increases. The price jumps follow six years of “relative qualm” for nickel, Roberto observed.

The five year average price for nickel has been US$6.09 per pound and the 20 year price US$7.31.  Recently it topped US$9. Copper averaged US$2.64 a pound over the past five years and the 20 year average is US$2.96.  It has reached US$4.30.

There isn’t much price negotiating going on, Roberto said.  There are a limited number of wire mills and “what the wire mill quotes you are stuck with it”.

The unknown factor in nickel pricing are “ghost warehouses” holding unknown amounts of supply, Roberto commented. In addition to higher prices, it is hard to book shipping lanes, Roberto mentioned. What used to take three weeks now takes six to eight weeks. Railroads also cut back during the pandemic and can’t just simply hire more. “You just can’t do that overnight”, Roberto pointed out. China also is using more of its production domestically.  The 13% export rebate has been cut making supplying China versus exporting more competitive.

Danielle Riggs, managing director of Würth Logistics, summarised the current supply chain situation as a “train wreck”. For example, Würth has had a container stuck in Chicago since July, Riggs noted. There are “one and a half million kilos that can’t get to a warehouse”.

Würth monitors the Freight Baltic Index in shipping decisions. The Baltic Dry Index is a measure of the correlation between the supply of large super bulk cargo ships and the demand for the freight space on the ships.

EV market creates questions for fastener industry

An actual count shows 6.16% fewer fasteners in an electric vehicle than the traditional internal combustion engine. This was according to Phil Lienert of General Motors advanced technology communications team, who responded to a GlobalFastenerNews.com inquiry on the difference between the number of fasteners in its EVs versus ICE.

“We compared two similar ICE and EV models and found that the ICE model had about 730 fasteners in its propulsion system with about 685 for the EV,” Lienert reported. “Outside of the propulsion system, we expect that EVs will have a similar number of fasteners to their ICE counterparts,” Lienert added.

Traditionally the total number of fasteners in a car has frequently been rounded off to 2,500.   Lienert noted the actual “total number of fasteners varies from vehicle-to-vehicle, but 1,400 is a rough average for the typical GM internal combustion vehicle, not counting pre-assembled components that might contain additional fasteners”.

The industry is aware and moving toward EV fasteners.  New York-based Sherex Fastening Solutions has begun marketing EV fasteners, including its fasteners for thin sheet and lightweight materials. Sherex points out that “it’s not just the way the vehicle runs that’s the difference” and “Sherex understands the differences and nuances between EVs and combustion engine vehicles”. EVs use more aluminium, composites and carbon fibre than traditional combustion engines.  Sherex has fasteners for thin sheet base materials for easier assembly and joint strength.