December Nail Update
FOR IMMEDIATE RELEASE:
Nail Update
December 04, 2017
Continental Materials, as the leader and one of the largest suppliers of roofing nails from China, continues to be committed to keeping our customers and the market informed with accurate “in the moment” information on current nail issues. We at CMI, now in our 60th year, know how important it is to have reliable information so our customers can make the decisions needed to allow them to run their businesses successfully.
Recent government mandated steel plant closures have really started to drive higher steel costs for all metal based products. Wire rod for nails went from 4,080 RMB on November 1st to 4,470 RMB on December 1st and was at 3,250 RMB back on May 1st. During that period the cost of a box of coil roofing nails has gone up 42%. 28% of that cost is the steel, but the previously discussed increases in galvanizing fees, copper welding wire, boxes, and plant water treatment are also a large impactor and have driven many nail factories to severe financial hardship. Their capital requirements to run their business at 42% (and maybe) higher cost levels may be unsustainable for some plants. We do believe some plants, regardless of size, will choose to delay or cancel orders rather than ship them at the severe loss scenario they are experiencing. Some plants are already $2,000 USD per container in the hole. This is when you need to make sure you are working with reliable suppliers committed to the long term business.
The severe lead times exacerbates this problem more so. Traditionally plants booked orders for the following month or at most to ship two months out. Now with them taking orders 4 – 5 months out they have no way of knowing what their cost will be and “NONE” have the capital to buy their steel requirements that far out. This is a very troubling scenario.
On the supply side we have plenty of post Lunar New Year capacity and encourage our customers to go long on your needs through the entire second quarter. Please feel free to call your CMI Rep or CMI for any upcoming needs you may have.
Update on PLASTIC CAPS AND POSSIBLE SEVERE SHORTAGES – We had previously advised you of the shortages being created by government plant closures of smaller cap producers. This situation has not changed and we believe will not. Additionally much higher costs are coming as the Chinese Government is putting through regulations preventing the importing of secondary plastic scrap and waste of most types. Currently the plastic pellets used to make plastic caps come from recycled “Grade B” plastic. New regulations may make this material harder to get and that is if it will be available at all. A switch to Grade A (prime) raw plastic is much more environmentally friendly to the Chinese government, requires limited treatment, but will raise the cost approximately 15%. With reduced supply we think you may see 6 month lead times on plastic caps, so please plan accordingly.
Supply of Plastic Caps is very tight.
Careful forward planning is the key for steady supply. Deal with reliable suppliers that have a presence at the factories and stay on top of their business. Don’t fall prey to those that take an order based on when you say you need product vs. those that provide you the accurate information you need to run your business.
Thank you for your continued support, and the privilege to help our customers navigate their path through this complicated maze.
Continental Materials, Inc. (CMI) is a national supplier of roofing system component materials and known for BUR (built-up roofing) asphalt with “No Smell”™ odor eliminating technology and its WeatherSeal™ protective packaging, All-Weather™ asphalt felts and coated organic rolls, CMI All-Weather™ modified bitumen rolls, SureGrip™ construction fasteners and roofing nails, Continental’s eco-friendly high density fiberboard roof insulation board and a premium line of SecureGrip™ synthetic roof underlayment products that are sold and used widely throughout the country. CMI has provided value added products and superior service to the roofing industry since 1958.
For more information on CMI products, call (215) 884-4930, visit www.continentalmaterials.com or contact your local CMI Sales Representative.