After the increasing timber prices during 2007 the European Pallet and Packaging Industry is now confronted by significantly increased world steel prices, caused by:
• Sharply increasing prices of iron ore (up 71% in 12 months) and coking coal (up 240%);
• Lower availability of raw materials because of a higher demand in China and elsewhere in Asia and the Middle East;
• Increasing energy prices and transportation costs;
• Steel billet prices have surged to $900 per tonne (doubled in the past year).
As a consequence nail manufacturers had to progressively raise nail prices. Prices have already risen by 50% since last year (a European average). The increase in prices is accelerating and the market prediction is that the increase of prices will continue for the months to come. Market indications are that steel prices will remain at a high level for several years.
Nails are representing approximately 5% of the cost price of a pallet or packaging unit. The ongoing increases in nail prices leads to the consequence of increases in timber pallet and packaging prices
and further increases are likely as higher nail prices work through the system.
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