Most factories are demanding price increases before they will ship existing orders to UK fastener importers.

The rebate was cut from 13% to 5% and there is talk of it being cut to zero in the autumn.

Even large-scale import members of the British Association of Fastener Distributors say they have had no choice but to accept immediate higher prices in order to ensure product is received on schedule.

They also say that alternative sourcing is out of the question as fastener production in several other Asian countries relies largely on Chinese steel, on which the rebate has been completely eliminated.

“Market prices for many standard fastener and fixing products are, therefore, set to increase substantially during 2007 quarter 3,” said the association.

The rebate cuts are aimed at slowing China’s rapid rise in exports and take some heat off its currency.