On Monday 14 July 2008, Exafast will implement a new price list. This move has become necessary as a result of recent unprecedented increases in the market price of steel fasteners; particularly those sourced from China.
The factors driving the increases in fastener costs are outlined below:
- The local price of steel in China has doubled over the period 1 January 2007 to 1 June 2008.
- When converted to AUD, the local price of steel in China is up some 92% over the period 1 January 2007 to 1 June 2008 – click to view chart of steel price movements.
- Factors driving the rapid increase in the price of steel in China include the increasing cost of iron ore and coking coal, as well as extremely strong local demand for steel which is outstripping supply.
- The supply of steel within China has been hampered by the closure of a number of mills due to lack of profitability or environmental reasons (partly driven by the Chinese governments’ efforts to reduce pollution prior to the Olympics).
- The demand for steel in China is also impacting on the availability and price of steel in other Asian markets.
- Although the AUD is up around 20% against the USD in the period 1 January 2007 to 1 June 2008, the strengthening of the Chinese Yuan means that the AUD is up just 7% against the Yuan over the same period.
- On 1 July 2007, the export tariff rebate available to Chinese exporters of steel fasteners was reduced from 13% to 5%; effectively increasing the price of fasteners by 8% overnight.
- It is widely expected that the remaining 5% export tariff rebate will be removed before the end of this year. Further, a move to a tariff on exported fasteners is possible; as has already been applied to exported raw steel stock.
Although the July 2008 Price List represents a significant price increase, it does not fully reflect the current market price of steel fasteners. Should the steel price remain close to its current level or increase further, another revision of the price list is likely to become necessary in the near future.
Whilst Exafast will continue to do everything possible to deliver value to its customers, we trust that you appreciate that recent price increases are due to factors beyond our control and reflect cost increases that are beyond our capacity to absorb in their entirety.
