Thursday, August 02, 2007

Stainless steel prices in turmoil

Western stainless steel producers of strip mill products have temporarily abandoned their traditional basis plus surcharge mechanism for selling their material. Most EU and US mills are now quoting only transaction (effective) figures. This is, principally, to disguise the discounts necessary to obtain orders after the fall in the price of nickel since early June.

Technically, surcharges in July for grade 304 increased by around 5 and 3 percent in the EU and US, respectively. With the prospect of them falling over the next two months by almost €750 and $US1400 per tonne it is not surprising that customers are refusing to pay the current inflated figures. The alloy surcharge is almost meaningless in negotiations at this time.

Mill orders have dried up. Many producers have plans to cut output in the short term but are pushing material into stock and selling at substantially discounted levels to generate the limited business available.

Western stainless steelmakers are reluctant to give up the alloy surcharge mechanism which has served them well over the last decade. They continue to publish official figures for July and August deliveries, despite the fact that they will not be used for most deals. As a result, we will be publishing the quoted surcharge values in our tables.  

Link to original report at MEPS


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