Insight

Here PRISMEFIX – Association des Distributeurs Français Specialistes en Elements de Fixations – gives an insight into developments within the French fastener market and how it is continuing to support its members with key industry news.  

Regarding the French fastener distribution market, the first half of 2020 was obviously a difficult market due to the Covid-19 pandemic. The year remained altogether difficult in the industry sector, where the activity recovered slowly after the first shut-down period. For the second half of 2020 the DIY, renovation and construction sectors were bullish.

In 2021, despite the shortages and price increases, the recovery was strong in the industry sector and in the DIY and renovation markets the market remained very attractive until the autumn. Overall, volumes were probably higher in 2021 than in 2019.

For 2022, the first trimester remained positive, especially in the industry sector, in spite of the uncertainties raised by the war in Ukraine and the continued increased prices of energy and raw materials. The last few months have seen the beginning of a slow-down due to a lower demand. We anticipate a stabilisation for the last two quarters of the year.

Of course there were some very big issues companies have needed to handle. Regarding the logistical issues, all importers have been strongly impacted by the huge price increase for containers. On top of this, sea-freight availability has also been an issue with delayed ETAs reaching sometimes 4 weeks or more.

At PRISMEFIX we shared information through our newsletters and meetings, trying to anticipate and alert our member companies. The current situation seems to have improved on sea-freight – at least in terms of availability – even though uncertainty remains concerning China and its ‘zero-Covid policy’. If worldwide economic growth slows down in the coming months, as forecasted, sea-freight availability should mechanically improve over time. More recently land transportation is also coming under tension. However, the situation in France seems to be less critical as in other European countries for the moment (the lack of drivers is not as important as in the UK for example).

As for costs, all our member companies are impacted by the current inflation in raw material, energy, transportation, labour, etc. Raw material prices remain at a high level but the slow-down of Chinese and world economies could help prices come back to more reasonable levels or at least stabilise. For the same reasons, sea-freight cost should also improve on the mid-term even though spot prices are remaining high. In all cases we expect that coming back to pre-Covid market conditions will not happen.

To add to this there is also the currency exchange rate between the US dollar and the euro. A lot of French distributors import products from Asia and pay in US dollars. However, the parity between the euro and the US dollar has been strongly increasing purchasing costs over the past 12 months (parity from 1.20 to 1.05). Here again a stabilised situation should lead to an improvement in the mid-term, but the impact will remain negative at least until the end of 2022.

Next there is the anti-dumping duty, which has further increased the instability in market conditions. Previous imports from China will have to be transferred to alternative sources and thus creating shortages and increased lead times.

At PRISMEFIX we are also trying to help our members avoid risks of circumvention providing them with legal and customs information. This topic is critical in part due to the very high differential in anti-dumping duties between the ‘common rate’ of 86.5% and the ‘preferential rate’ of 39.6% for a large number of Chinese companies. EFDA is of course a big help in that matter.

Even with these challenges, globally the market situation provides good opportunities for fastener distribution. Since the beginning of the Covid-19 crisis, distribution has shown that it is a helpful solution to secure the industrial supply chain. Moreover, we see a global trend in Europe for re-industrialisation and this will of course generate extra demand for fastener distributors. It will however need quite a long time to have a significant impact.

The long-term changes in global world trade, with a recent trend on local productions, will lead our member companies to review their sourcing policies and stress their ability to ‘deliver on time in full’ to its customers. Quality of product and delivery will also become more and more the key issue.

The trend on relocation will lead our member companies to also review their sourcing policies. Quality, lead time, sustainability and flexibility will be the main imperatives for customers. This is exactly what PRISMEFIX members stand for and in this perspective their role as distributors will remain critical in enabling supply chains to be fluid and qualitative.

Throughout all of these challenges the aim of PRISMEFIX will be to continue expanding the number of members, which will enable us to increase our representativity and thus our ability to weigh in on state or industry decision making. Of course, this will also enlarge and improve the quality of our exchanges.

In more practical terms we will also continue to enrich and develop our newsletter with additional information. The newsletter is sent every two months and includes PRISMEFIX news, EFDA news, European community news, a worldwide selection of news, technical issues, normative news, raw material graphs and a worldwide exhibition calendar.

As an association we will also look to have at least two meetings every year so we can give members up to date news regarding the industry and so they can share experiences on non-sensitive subjects.