One “benefit” from our worst recession in over 80 years was that commodity costs have been stable to down. It looks like that is about to change.
Many of the standard steel fasteners and large quantity specials are coming from Taiwan, China, and other Asian countries. Here is a quote from an industry publication (TR Fastenings) about the efforts of the Taiwanese government to reduce pollution:
“The Taiwanese government has radically tightened controls over the discharge of waste effluent into water courses following a series of incidences late in 2013. As a result of the clampdown electroplating plants have closed throughout Taiwan, with some fastener suppliers suggesting 80% of plants are currently unavailable to process fasteners. The inevitable short term result is substantial increases in lead times for plated fasteners – estimates vary between 30 and 60 days currently and plating costs increased by, reports say, typically 30%.”
Nickel is the key cost driver of 300 series stainless steel, commonly referred to as “18-8”. Nickel prices have reached a two year high this month. The cost since January has increased by over 30%.
It is hard to determine the cause of this rapid increase. Is it demand driven or trader speculation? The current unsettling situation in Eastern Europe does not help. Russia is home to the world’s largest nickel mining operation.
We need to plan for both cost and lead time increases as we move forward. If you are a customer, this is a good time to discuss your needs with your respective account manager.