Last September we reported on an expected ruling by the U.S Commerce Department on possible tariffs that might be placed against imported nails. Well, the Commerce Department made that ruling last January 16th and you are probably already feeling the effects, because within days nail prices jumped an average of almost 30%.
The ruling against the People's Republic of China and United Arab Emirates for selling nails here "at less than fair value"-as much as 118.04 percent less, in China's case had two immediate effects: it imposed duties and requires the identified countries to pay cash deposits or bonds on the affected goods exported here; and it will empower the International Trade Commission to investigate "whether industry is being damaged" by the unfair practice, according to a DOC spokesperson. The Commerce Department is expected to issue a final ruling in June 2008, but that would only adjust individual tariffs for specific companies.
"This is a big issue for our industry," Chris Dutra, VP of Product and Channel Management for Stanley Bostitch told me last week. "We've already started writing checks at the ports." Nails covered by the ruling include collated and bulk framing nails along with a wide variety of other types, sizes, and finishes. Collated finish nails and staples, and roofing nails were excluded.
A number of U.S. tool and fastener manufacturers, some of which import nails made overseas, opposed the dumping petition because they feared it would only limit supply and further increase the steadily rising prices of steel nails and other fasteners.
It looks like they were right on target. Rising steel rod prices added into the troubling mix have affected domestic manufacturing to the point that imported nails are pulling even with prices for domestic-made nails, that just four of five months ago were separated by 10% to 15%, according to Mike Malher of Orco Construction Supply . Rod prices alone might add another 10% to prices already raised by the new duties.
And the bad news doesn't stop there. "Anti-dumping duties, rod prices, and freight shipping costs are like a perfect storm," Senco's William Roberts, Director of International Sales and Marketing told me. "I've never seen it as dramatic as it has been the last 12 months."
What does this all mean for contractors? Well say goodbye to a $20 box of nails for one thing, those prices have already jumped $8 to $9 per box, says Malher, who points out that steel prices are also affecting rebar costs.
"Contractors should build escalation clauses into their contracts because they're going to see $30 boxes of sinkers," Malher says. Orco worked since last September to alert its customers about the impending increases, but according to Malher many didn't listen and are now "panic buying." Senco's Roberts adds, "No manufacturer wants to raise prices, and we try to absorb as much as we can. The good news for us is we never quit making products in the U.S.
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