Fastener Fair visitors expect long wait for recovery

European buyers of cold heading quality (CHQ) wire rod secured modest price reductions for their October-December deliveries amid challenging market conditions, attendees at Milan’s Fastener Fair Italy expo revealed.   

Attendees at the Allianz MiCo convention centre event, in Milan’s Citylife district, told MEPS that challenging market conditions persist across the continent. Fastener sales are down by 20-30% year-on-year across Europe.  

A significant decline in automotive sector activity is contributing to the decline. Major carmakers are currently exposed to a lack of demand for electric vehicles (EVs). Europe’s new EV sales volumes were down by 5.8% year-to-date at the end of September. This is largely attributed to the high cost of the vehicles and the lack of charging infrastructure.  

Competition from low-cost Chinese EVs has also affected Europe’s automotive sector. The European Union recently introduced tariffs of up to 45.4% on EVs imported from China. The measure has divided opinion among nations, however. It is likely to lead to reciprocal trade action by Beijing, harming European vehicle exports.  

Activity across a range of other wire-consuming sectors is significantly down. Recent interest rate cuts by the European Central Bank are yet to increase consumer confidence.  

As a result of the subdued market, most CHQ rod and bar buyers at the recent expo in Milan said that they will maintain a conservative procurement strategy in the short term.  

Owing to demand weakness in their regional markets, Asia’s fastener producers are increasingly motivated to sell into Europe. The absence of trade protection for downstream steel products will enable them to do so. 

European nut, bolt and screw producers say that low-priced competition from Taiwan and China, and most recently, Vietnam is increasing the regional market share of suppliers from those countries. 

Addressing the supply/demand imbalance 

Some European fastener market participants report that the significant reduction in car production is likely to result in increased availability of wire rod products, including those of cold-heading qualities. However, many producers are taking steps to redress the imbalance between supply and demand. Consequently, mill delivery lead times for CHQ material are holding firm. 

ArcelorMittal is expected to reduce its capacity in the fourth quarter of the year. Other wire rod and bar mills may take a similar course of action. 

In the United Kingdom, British Steel is offering limited volumes from its UK operation due to ongoing blast furnace issues. Its sister plant, Netherlands-based FN Steel, is helping to make up for any supply shortfall. 

Many European CHQ buyers at October’s Milan expo reported that steel manufacturers had signalled their intention to lock in prices for the first six months of next year, rather than the usual January-March period. They are encouraged to do so by cold-heading prices that continue to command a significant premium over their low carbon mesh and drawing quality counterparts.  

Nonetheless, European producers will be hard pressed to secure CHQ rod price increases in their annual contract negotiations. With little hope of a demand recovery until the middle of next year, at the very earliest, buyers will be reluctant to pay more.