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Home > News > Industry Activities > Chinese rebate cut drives fastener prices up

Chinese rebate cut drives fastener prices up

By , 2008-03-08 12:00:00

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Market prices for many standard fastener and fixing products set to increase substantially during 2007 Quarter 3

Effective 1st July the Chinese government reduced the tax rebate on exported fasteners and fixing products from 13% to 5%. The move was part of a radical reduction in support across over a third of products exported from China, with particular emphasis on high energy consuming, high polluting and resource intensive goods.

The severity of the reduction, in relation to tight export margins, has meant most factories demanding immediate price increases before they will ship existing orders to UK fastener importers.

Prices for new orders have reflected the anticipated rebate cut for several weeks with some factories already factoring in the probability of a further rebate reduction to zero by autumn.

Shortages of freight containers and tighter policies on container load weights have added to the inflationary pressure by pushing up sea freight charges by as much as 70% since the beginning of the year.

Even large-scale import members of the British Association of Fastener Distributors say they have had no choice but to accept immediate higher prices in order to ensure product is received on schedule.

Short term alternative sourcing is out of the question, they add, with their priority to ensure customers continue to receive good availability.

Fastener production in several other Asian countries relies largely on Chinese steel, on which the rebate has been completely eliminated.

Importers say this makes it very unlikely longer term re-sourcing would allow them to avoid increased costs.

Market prices for many standard fastener and fixing products are, therefore, set to increase substantially during 2007 Quarter 3.

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