Nail prices jumped about 30% within days of the Jan. 16 preliminary ruling by the Commerce Department on nail dumping in U.S. markets. (First reported in Tools of the Trade, Sept./Oct. 2007.) Responding to a complaint filed by five U.S. nail manufacturers and one labor union, the Commerce Department issued its 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% less in China's case.
Although preliminary, the ruling had two immediate effects: it imposed duties and requires the identified countries to pay cash deposits or bonds on the affected goods exported to here; and it will empower the International Trade Commission to investigate "whether the industry is being damaged" by the unfair practice, according to an agency spokesperson. The Commerce Department is expected to issue a final ruling in June, but that would only adjust individual tariffs for specific companies.
"This is a big issue for our industry," says Chris Dutra, vice president of product and channel management for Stanley Bostitch. "We've already started writing checks at the ports."
The ruling covers nails of a wide variety of types, sizes, and finishes but excludes collated finish nails and staples, and roofing nails. The original complaint was filed in May 2007 by an industry group that included Mid Continent Nail Corp., Davis Wire Corp., Gerdau Ameristeel Corp. (Atlas Steel Wire Division), Maze Nails (W.H. Maze Co.), and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (PA).
A number of U.S. tool and fastener manufacturers, some that import nails made overseas, opposed the dumping petition because they feared it would just 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 have affected domestic manufacturing to the point that the prices of imported nails are now pulling even with prices for domestic-made nails; just four or five months ago, there was a 10% to 15% difference in these prices, according to Mike Malher of Orco Construction Supply. Rod prices alone might add another 10% to prices already climbing because of 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," says Senco's William Roberts, director of international sales and marketing. "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 says 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 September to alert its customers about the impending increases but, according to Malher, many didn't listen and are now "panic buying."
"No manufacturer wants to raise prices, and we try to absorb as much as we can," Senco's Roberts adds. "The good news for us is we never quit making products in the United States."