Owlett-Jaton Comment: Q4 2023

The subdued market conditions seen in Q2 and Q3 have continued through into Q4, with both new construction and RM&I down year-on-year. This has impacted directly on volumes in fasteners and fixings, with sales continuing to be down year-on-year. Compared to earlier in the year and 2022, prices have continued to ease, with lower cost prices from the Far East and, until recently, lower shipping costs. With the majority of products being purchased in USD, the slight strengthening of GBP has also helped to keep prices down. All of these factors have contributed to a continuing decline in the value of sales.

However, recent events in the Red Sea may well have an impact as we move into 2024. With the majority of shipping lines having diverted their Far East routings away from the more direct Red Sea and Suez Canal route, to the longer Cape of Good Hope route, there are impacts on cost price and supply. Shipping costs have had surcharges applied to reflect the longer passage and therefore more expensive route. But the longer route also has a marked impact on shipping capacity, and a previously 8-10 week return trip from the Far East to Europe will now take 12-14 weeks. This reduction in capacity, coupled with a growing imbalance in container availability, is resulting in shipping rates moving up which will feed into higher prices for fasteners and fixings.

Although the shift to the Cape of Good Hope has had a swift impact on landed costs, it has had less impact on product availability. Unlike 2021 when the Ever Given grounding in the Suez Canal led to notable disruption, shipping lines seem to have acted swiftly in diverting ships and there has been little delay outside of the first two weeks, as the ships made the longer passage and supplies are once again moving freely. Whilst some Just-In-Time supply chains may have been disrupted, stocks in the supply chain for fasteners and fixings have been more than adequate to ensure general availability has been maintained. With the supply chain also having adapted to Russian sanctions, supplies moving into 2024 seem secure.

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