Alloy surcharges drive stainless markets upwards
A
MEPS (International) product story
Edited by the Engineeringtalk editorial team
Oct 5, 2004
The global steel scene remains quite buoyant despite the substantial hikes in raw material costs to the producers.
The global steel scene remains quite buoyant despite the substantial hikes in raw material costs to the producers.
Alloy surcharges for the austenitic grades are at their highest levels recorded in the seven and a half years that MEPS has been publishing Stainless Steel Review.
Currently, in the USA, the popular grade 304 hot rolled coil carries an alloy surcharge of US $1336 per tonne.
This figure is higher than the agreed basis price and represents approximately 52% of the selling value of the product.
The situation is marginally less dramatic in Germany.
The type 304 alloy surcharge in September is Eur 910 per tonne, equivalent to 46% of the low transaction price.
Looking at the molybdenum bearing grade 316, the impact of alloy surcharges becomes even more startling.
In both the EU and USA, alloy surcharges equate to around 55% of the cost of buying hot rolled coil.
The balance between supply and demand still remains a determining factor for the price of austenitic stainless steel products.
However, this is overshadowed by the cost implications of the alloying elements which go into manufacturing them.
Many mills are strictly applying the alloy surcharges pertaining at the date of delivery and not at the time the order was placed.
This puts buyers in a very difficult position of not knowing the cost of the product which has been ordered.
They do have the opportunity to hedge against the price of nickel rising but this is not the traditional role of small/medium volume steel buyers.
They could actively seek alternative materials to solve their problems.
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