Fasteners industry is raw material intensive. The industrial fasteners cannot be replaced, due to the specific nature of operations. However, the use of them may be reduced. Therefore, the threat of substitutes is real. Major end-user industries prefer to engage directly with a fastener manufacturer or through their sales offices for screws, bolts/nuts/washers, and anchors. These industrial fasteners suppliers have multiple sales offices in various countries around the world. The fasteners demand is driven, primarily by the volatility of commodity prices, including prices for coal, copper and iron ore, product lifecycle, competitive pressures and other economic factors, affecting the construction and equipment industry.

Raw materials account for about 60-70% of production cost. Labour accounts for about 20% of the fastener manufacturing cost and increasing labour costs, and unionized labour environments are a risk to fastener manufacturers. The market is moderately capitalintensive, which poses a stiff barrier to the local or domestic fastener manufacturers. The six biggest fastener suppliers occupy around 13.6% of the market share at a global level, followed by small to medium-sized manufacturers. Hence, the competition among local manufacturers in a country and the competition among different countries in a region are fierce.

Covid effect

Machines and equipment need fasteners such as wedges, bolts and nuts, pins, screws, temporary joints, lock nuts, washers and rings, nails, and anchors to ensure they are secured always. These are always going to be useful and demand even though the types that will be in demand can vary from time to time according to requirement. The global market for industrial fasteners is driven by the activities in automotive, electrical and electronics, aerospace and industrial machinery markets.

Covid-19 outbreak in major manufacturing bases led to production cuts and reduced industrial demand during 2020. During the first two quarters of 2020, the automotive fasteners market suffered as activities came to a sudden halt in countries all over the globe. New fasteners fell in demand because the major industries that propel the industrial manufacturing and durables industry were affected due to Covid-19. These industries include aerospace, construction, machinery, and automotive.

As the effects of Covid-19 decrease and the economies come back to normalcy, the industry is expected to witness a growth in demand for numerous fastener types.

Growth drivers

The increase in industrialisation and urbanisation, especially in the emerging markets, is likely to drive the fasteners industry. Construction industry, along with the automotive sector, will progress, primarily driven by the industrialisation andurbanisation; thus, driving the consumption of fasteners in these sectors. China, India, South Korea, Brazil, Thailand and Saudi Arabia are expected to be the key demand areas supporting the overall growth in the fasteners market.

Rising demand for commodities - especially after the Covid 19 pandemic - across the world has led to increase in prices. For fastener makers this is major constraint for growth.

Global fasteners market outlook

Anticipated investment construction and industrial activity across major demand regions are expected to drive the growth in the fasteners market. Global fasteners market - estimated at $ 98.9 billion in 2019 - is expected to grow at a CAGR of 5-6% to $ 110.2 billion by 2021, according to Beroe Inc. By 2022, the industrial fasteners market is expected to grow at a CAGR of 4.5-5%.

Traditional joining methods include welding, adhesives, rivets and studs among others. These will be replaced by other high-end fasteners in the future. Moreover, there is likely going to be an increase in threads that fall under the category of threaded components.

The APAC will have the highest demand for standard fasteners in the coming years, due to an increase in demand for maintenance and repairs activities, increased construction activities, and automotive industry growth. However, regions, such as the EU and North America, will witness a comparatively higher demand for aerospace-grade fasteners.