4
Fastener & Fixing
Cold comfort for
Magazine
18 Alban Park,
autumn days?
Hatfield Road,
St Albans,
What do you know, over the last couple of months there has been a
Hertfordshire,
stream of interim reports from steel corporations confirming that first
AL4 OJJ, UK
half profits rose dramatically. Tel: 0044 (0) 1727 739 150
Taiwan’s China Steel Corporation, for example, reported second quarter
By Phil Matten
Fax: 0044 (0) 1727 831 033
unaudited pretax profits up 31.4% at TWD 18.84 billion – that’s around 418
Publisher
million euros. The world’s largest steel group, ArcelorMittal, announced first
Jeremy Ramsdale
half net income up 65% at US$8.2 billion. US Steel also reported net profits doubled in Quarter 2.
jerry@fastfair.net
The exception was a report from the China Iron and Steel Association (CISA) saying that large and
medium-sized manufacturers in China had seen first half profits fall by an average 7.6%.
Editor
In July fastener manufacturers were assailed by wire increases on what can only be described as an
Phil Matten
extremely robust ‘take it or leave it’ basis and warned of more increases to come before the year end.
phil@fastfair.net
Yes, the oligopoly of iron ore and coking coal extractors rammed up prices in the first half and energy costs
Assistant Editor
rocketed. And yes it probably is sensible to reserve judgement until third quarter and full year steel
Will Lowry
company results are available to gauge how cost increases have worked through. Nevertheless, it does not
will@fastfair.net
seem unduly cynical to reflect that steel prices are now increasing ‘because they can’.
But can they? In recent weeks there have been some interesting straws in the wind. Taiwan steel mills
Advertising Director
Jamie Mitchell
have been reported as cutting production in order to prevent a fall in steel prices. China Steel Corporation, it
jamie@fastfair.net
has to be said, has just announced further increases for Quarter 4 – the highest being applied to wire rod
products – arguing that domestic prices still fall below world market levels. ArcelorMittal had to explain Senior Advertising
why price cuts from its South African operation would not be reflected globally, indicating it would control
Executive
outputs to ensure ‘price stability’.
Harry Whyte
No avoiding it, though, world economic conditions are impacting steel demand. It’s a difficult picture to
harry@fastfair.net
bring into focus – different geographic markets slowing at different speeds, different grades of steel
Advertising Executive
impacted in different ways. Some mills with insufficient capacity to meet commitments, others saying
Claire Lake
production will have to be curtailed unless they receive orders.
claire@fastfair.net
Leading steel producers are clearly trying to balance output against receding demand – no surprise there
– but conditions are now going to test the degree to which consolidation allows the steel industry to
Production Manager
continue in its pricing aggressively. CISA expects total Chinese steel output to continue rising in the second
Gemma Edwards
half of 2008 as new large-scale projects come on line. Post Olympics construction and industrial demand
production@fastfair.net
will come back on stream –the question is how hard. The Chinese government’s attitude to growth is also
Fastener & Fixing Magazine
likely to prove significant. Inflation fell below 5% according to reports this week - a 14 month low that
is a dedicated, trade-only
eases pressure and might allow policy makers to boost the economy. publication which is
CISA reckons that Chinese steel prices will stay high in the second half year, although growth of GDP,
circulated freely throughout
the European trade.
fixed asset investment and industrial added value would decline, reducing domestic demand. Export
demand was also expected to soften and conditions may lead to “sharp ups and downs” for steel prices.
Disclaimer
Confused? You are not alone. A few things are reasonably clear if not particularly reassuring. In Europe
The Publisher cannot be held
wire rod prices have been driven up, hard, once again and there seems little the fastener industry can do
responsible or, in any way, liable for
errors or omissions, during input
about it, since cold heading wire represents a very small proportion of wire rod, let alone overall long
or printing, of any material supplied or
product, demand. In contrast in China official mill prices for wire rod have softened in recent weeks, contained herein. The Publisher also
admittedly only by a few percent. More significantly, though, anecdotal reports suggest that cold heading
cannot be held liable for any claims
wire is now available from stockists at prices as much as 25% below mill levels. Short term or evidence of
made by advertisers
or in contributions from individuals
a longer term trend – hard to tell, but important to watch.
or companies submitted for
European stocks of fastener products must inevitably be high as importers anticipated the probability of
inclusion within this publication.
antidumping tariffs in August. I won’t go on, again, about the uncertainty created by the antidumping
Copyright
process. Suffice to say the Commission has confirmed that preliminary tariffs will not be applied, but that
Entire contents copyright
the investigation will continue. (See our Analysis report (page 34) for more on this). So, high stocks of © Fastener Fairs Limited
higher cost inventory in the face of uncertain market conditions, and a final antidumping decision that must
No part of this publication may
come by early February, suggests Chinese factories are unlikely to be bombarded with orders.
be reproduced, stored in a retrieval
system, or transmitted in any form
To my mind pressure is mounting for, what was always an inevitable, correction in steel prices. How
or by any means without the prior
steep and how deep, is way beyond the competence of this observer. One of the biggest issues, though, permission of the publisher.
could prove to be that, while falling steel prices are blazoned across the business headlines, the cost of
Annual subscription (6 issues) to
fasteners may well still be rising – something that is not going to prove easy to explain to fastener user
non-trade and outside EU is
buyers, I am afraid.
£80/€120/$160
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