Global Steel Surcharge 1

[bulldogwld]

Hello, we have been purchasing from US mills and have been assessed monthly surcharges on scrap, moly, etc.

We are quoting/competing at the global level and am wondering if there is a Global standard or database on what surcharges are at the Global level?

 

[arunmrao]

Interesting! Infact now the prices are softening for steel. But ferro alloys ,like ferro chrome,ferro silicon and ferro manganese are still a problem. Ferro moly,nickel, vanadium prices are more stable.

Very soon one might also look at increase in refractory cost,which has nearly doubled in last 8 months.

Chocolates,men,coffee: are somethings liked better rich!!
(noticed in a coffee shop)

 

[EdStainless]

In Asia the practice is to build the costs in and simply change cost each month.
The other issue is that different steel companies as using different basis for the surcharge.

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Plymouth Tube

 

[TVP]

There is no global standard for surcharges. Alloying elements in the form of ferrosilicon, ferrochrome, etc. are produced by multiple companies around the world that are subject to market forces of supply and demand, so these prices vary as well. Most of the large steel producers update their surcharges monthly and keep the information available to all on their websites.

 

[dbooker630]

The next step in this process in automotive is whether the Tier I and II suppliers begin adding surcharges. It has never been received well by the OEM's. My company is getting ready to do this, it will be interesting if other suppliers join us.

 

[EdStainless]

If you can show the surcharges are either pass throughs from your suppliers or that they are linked to real, publicly available metal prices that you have had to pay then it should work. You will be able to tell people at least 7 weeks ahead of time and the numbers will go both up and down. If the system is credible then you should not have too much trouble. We offer customers options: They can let us mark up the prices and we will hold them firm, Or they can accept a base plus surcharge, Or they can pay for all of the metal at time of order (usually 70% of total order value). Most take the third option.

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Plymouth Tube

 

[arunmrao]

Ed,
Why stop at 70% . Does it mean that 30% is net profit margin? I look for 50%(makes up for my raw material cost) upfront to hold the price for that specific month's supply.
But this is always not possible.

With the current credit squeeze, I believe many US buyers are reneging on their payments. Hope this does not turn into an epidemic.

Chocolates,men,coffee: are somethings liked better rich!!
(noticed in a coffee shop)

 

[EdStainless]

In our case total conversion, overhead and profit is about 30%, actual material cost is 65%, so we bump it up to 70% to reflect the extra hassle of holding the material.

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Plymouth Tube