Where Fastener Prices are Headed in 2022
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Originally Posted On: https://www.mudgefasteners.com/news/2021/12/6/where-fastener-prices-are-headed-in-2022
As most industries saw significant cost increases throughout 2021, many of our customers are wondering what the cost landscape looks like for 2022, especially as it relates to fasteners. Although fasteners typically make up a small portion of a product’s or project’s overall cost, fasteners are not immune to price fluctuation, and it’s wise of fastener buyers to keep this in mind.
The cost of fasteners is 2022 is going to be driven by several factors; the ongoing coronavirus pandemic and how its affects will impact production levels, the cost of raw materials, the cost of shipping and delivery, and the overall demand for fasteners both domestically and around the world.
Globally, the cost of raw materials will remain high in 2022 as demand continues to climb. At the beginning of the pandemic, plants slowed down or halted completely; fearing a worldwide recession. Thankfully, that fear was unfounded and demand did not disappear, instead it shifted from sectors like air travel, to consumer goods and vehicles. While the commodities industries work to replenish their supply, demand will continue to drive cost.
Production is expected to rebound in the early half of 2022, but we know that COVID disruptions can stall production and capacity without warning. Another factor that could affect input is the curbing of industrial production in China due to the 2022 Winter Olympics. China is where a large share of the world’s fasteners are manufactured, and they often forcefully slow down production to improve air quality prior to and during major events.
Since the beginning of the pandemic, the price of shipping containers has spiked by as much as three or four times the pre-COVID price. As the global demand continues to outpace available capacity, the price of overseas shipping will continue to affect fastener prices. Typically, containers have a peak season for goods, usually from July to October, but this year volumes increased and then remained elevated, causing available capacity to be maxed out, according to Judah Levine, research lead at Freightos. Rates were already rising for overseas shipping when a COVID outbreak at the port of Yantian, one of China’s busiest container ports, added even lengthier delays. Efforts to restock empty warehouses are likely to keep demand elevated beyond the peak season.
Road, bridge, pipe, electric wire and rail projects will require an enormous amount of steel, aluminum and copper. The US federal government has slated approximately $550 billion towards these projects, creating even more demand for metals. Other building materials, such as cement and lumber, could also be used for construction projects under the bill. Fasteners will be used in almost all of these projects, and adding in the rebound in manufacturing, fastener demand will remain quite high throughout the new year.
While we can’t tell exactly how much fastener prices may rise, we’re fairly sure they won’t be decreasing any time soon. If you’re planning your fastener purchases for 2022 now, contact Mudge Fasteners at (800) 634-0406 now to learn how you can get ahead of any additional price increases and stay profitable in the new year.