In recent years, the cost of raw materials has surged dramatically, placing immense pressure on fastener manufacturers. According to Luo Baihui, the secretary-general of the International Mould, Hardware and Plastics Industry Suppliers Association, more than 60% of the final product price for fastener companies is attributed to raw material costs. When this percentage exceeds 70%, companies are forced to raise their prices. For small and medium-sized enterprises, which lack scale and complex assembly processes, rising raw material costs have become a critical survival challenge.
Despite these challenges, the high-cost era in China's fastener industry is here to stay. Companies must accept the reality of rising prices, while also dealing with shrinking profit margins. To survive, many have had to increase product prices, but this has led to customer pushback, as clients repeatedly ask for lower costs. The rising cost of raw materials has turned into a bottleneck for development, even threatening the survival of some firms.
However, rather than resigning to fate, companies are looking inward for solutions. As Chen Weibiao, general manager of Hangzhou Special Standards Co., Ltd., pointed out, while external factors like rising raw material prices are beyond control, internal improvements—such as enhancing product quality, optimizing internal structures, increasing technical investment, and redefining product value—can make a difference. These changes are essential for long-term sustainability.
The fastener industry is increasingly focused on "transition" and "upgrade." Yet, under the pressure of rising raw material and labor costs, most Chinese fastener companies face a difficult path. In mid-September, raw material prices rebounded sharply, with steel billets rising over 16% and iron ore prices climbing nearly 26%. This volatility directly impacts production costs and puts significant pressure on businesses.
In this high-cost environment, traditional advantages such as speed-to-market and cost-efficiency are losing their edge. Historically, when the market boomed, products often became saturated. China produces a quarter of the world’s fasteners, but most are low-grade and low-intensity. Standard parts below grade 8.8 account for about 45%-50% of the market. With high raw material costs, overcapacity in low-end products has become a major obstacle to industry growth. Excess inventory leads to tight cash flow, forcing companies to seek new ways to convert costs into profits through increased technology investment and improved efficiency.
Luo Baihui highlights that future opportunities lie in key national projects such as high-speed rail, aerospace, highways, and airports. Boeing plans to add 3,400 planes over the next 20 years, while the NDRC has allocated 800 billion yuan for urban rail transit projects. By 2020, urban rail transit operating mileage is expected to reach 6,560 kilometers, creating a demand for high-strength fasteners worth 55-70 billion yuan. These large-scale projects offer a chance for fastener companies to move beyond the “low-end†label.
For manufacturers, raw materials like iron ore and wire rods are essential. Since September, common carbon steel billet prices have risen by over 16%, and iron ore prices have rebounded by nearly 26%. With downstream demand struggling to keep up, a significant price correction later in the year may be inevitable. Therefore, proactively purchasing raw materials at lower prices is crucial for cost management and future production planning.
Controlling production costs and saving resources is also vital. Steel remains the dominant material in hardware fasteners, and competition is fierce. Luo Baihui suggests two main strategies: reducing alloy content or using cheaper alternatives, and lowering manufacturing costs through process optimization. For example, using non-modulated or free-cutting steel can improve machining efficiency. The adoption of cold heading steel from the automotive industry has helped promote the use of new materials. Some high-strength fasteners now follow foreign standards, and the use of special steel for specific bolts is expected to grow in the next few years.
In the broader manufacturing chain, raw material price fluctuations inevitably affect the fastener industry. While there is no one-size-fits-all solution, the future lies in addressing the issue of low-end capacity, managing procurement timing for cost-effective production, and reducing expenses through resource efficiency. These are the pressing questions that companies must confront.
Raw materials are rising, and passive companies risk being left behind. To survive and grow, they must take initiative, explore new paths, and strengthen their internal capabilities to adapt to market changes.
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