DIFFERENT ELEMENTS CAUSING FLUCTUATIONS IN STAINLESS ALLOY SURCHARGES

Nickel remains the largest factor in determining alloy surcharges, but other input costs are now moving closer to centre stage. Most dramatic has been molybdenum. The price surged by 50 percent within a matter of days to hit a 25-year high of $US40 per kg earlier this month. For those stainless steel grades containing this element – the most widely used is type 316 – the surcharges have been rising steeply. In Europe, Outokumpu’s “alloy adjustment factor” on type 316 coil products for May has advanced to €1,345 per tonne. In January it stood at €972 per tonne. However, this 38 percent increase does not take into account the most recent surge in molybdenum prices. In Europe the 316 surcharge could be as high as €1,750 per tonne by July.

One European stainless producer stopped taking orders for moly-bearing grades because of the pricing uncertainty and then began offering on a daily basis only. It apparently feared a cash squeeze in the lapse of time between paying higher prices to its ferro-alloy suppliers and being able to pass on these extra costs to customers through the surcharge system. In the USA, major stainless mills have advised their customers of a surcharge on type 316 of 76.99 cents per lb for May, up by 50 percent since January. The molybdenum element has more than doubled – from 6.78 cents per lb in January to 14.64 cents per lb in May.

Customers who switched from austenitic to ferritic grades of stainless to reduce their exposure to fluctuating alloy costs have found themselves less than fully protected. Chromium has gone up substantially in price, and mills have also introduced an “iron surcharge” to cover higher carbon steel scrap costs. Thus, for type 430 coils in the USA, the total surcharge has risen more than fivefold so far this year – from 2.50 cents per lb to 12.51 cents per lb – though it remains of course far lower than the figure for 300 series materials.

Even if users turn to the low-nickel 200 series they will face the surcharge challenge. Allegheny Ludlum in the USA has become the first major mill to demand an alloy surcharge for manganese.

Source: MEPS - Stainless Steel Review            Click here for MEPS World Stainless Steel Prices