ACS have highlighted the threat of significant raw material price increases over recent months. As of Wednesday 1st February 2017 ACS’s standard products are set to rise between 7.5% – 10.5%.
Supply side factors have continued to dominate sustained stainless steel price increases throughout the second half of 2016. This has continued with the rates offered for the first quarter of 2017.
These increases are a culmination of:
· Anti-dumping duties on material from the Far East
· Mills restricting production capacity
· Continued increase in the prices of Nickel and Chrome
· Exchange rate volatility seen since the referendum vote
Exchange rate volatility continues to make headline news effecting everyday staple products but they also heavily influence future metal price forecasts. The stainless steel mill’s trade goods in Dollars or Euros overseas. Many of the components require Dollar traded commodities to produce the metal.
A number of factors determine the price of stainless steel. The monthly surcharge that gets add to the base price of the metal is one of these factors. Historically Nickel has been a major contributor to the volatility of prices. However, the demand/supply of Nickel and Chrome has drove February’s surcharge, announced by the European producer Outokumpu. The announcement of the February surcharge of £1230/tonne for grade 304 material represents an increase of approximately 90% over a 12 month period (Feb ’16 – Feb ’17). The European quarterly bench mark price for Chrome for the first three months of 2017 is 79% higher than the corresponding figure for 2016. In the second quarter this is forecast to increase again.
We are advising all clients to get our Specification Team involved as early as possible in their projects to ensure a value engineering exercise is completed and prices are stabilised.
“There really is no need to panic. As long as clients plan ahead, getting us involved as early as possible, we can limit the impact of these increases” – Tony Higson ACS Commercial Director.