Price evolution, price breakdown, scrap prices

Stainless steel prices are very volatile at present, as those in the industry will know. Iron and aluminium prices are also fluctuating, but not as much as stainless steel. It is extremely difficult to predict whether prices will increase or decrease, certainly in the medium- to long-term.

Of course the trends are more obvious if you follow stainless steel prices over the years, but you would need a crystal ball to get a clear picture. While it used to be possible more or less to predict price changes a few months in advance, that is no longer the case. Nevertheless,  some factors that influence the price can be identified.

Factors that influence the price of new stainless steel materials

An initial determining factor is the so-called “base price”. This is a price that is set by the producers and that is strongly influenced by supply and demand. Whereas in the past producers often wanted to produce at any cost, resulting in supply exceeding demand and causing prices to plummet, we see in periods of economic crisis that producers are more likely to tailor their production capacity to make supply better match the lower demand.

A second aspect is the ”alloy surcharge”, which is closely related to the nickel price quoted on international markets. Of course supply and demand play a role here, but there is also the influence of speculators who place large bets on the commodities market. As a result, there is a disconnect between the value of nickel and the real economy, sometimes leading to very volatile stainless steel prices which benefit no-one. The alloy surcharge, then, has an important influence of the volatility of stainless steel prices. The surcharges are known at the end of the month and are therefore linked to the nickel price. 

Given the fact that it is an international market, the value of the dollar also plays a role. Because the stainless steel market is international, several more factors raise their heads: if we order material, at least half the time it is not stocked in Belgium, it has to be supplied from Germany, the Netherlands, Italy and,  for special materials, often from Great Britain or even the US. If there is an imbalance in the market (e.g. if prices on the European market are quite high compared to the rest of the world), we are soon bombarded with material from Asia.

The metal scrap price quote is a fourth important factor in determining the price. Again, this is closely related to supply and demand at a global level (at present there is strong demand from Asia) and is heavily influenced by the value of nickel.

There are also a number of additional factors that influence material prices. Speculation, rumours and expectations are also reflected in the price. A strike in a mine, a ship that is embargoed somewhere, the Chinese buying up everything ... I often have the impression that these kinds of rumours are put about deliberately to boost demand temporarily.

In the medium-term, I think the best predictor is the health of world economy itself. If economy is sick, prices will go down. If it is healthy, prices will rise. But isn’t that the way with everything? At the moment, both we and the big traders are at the mercy of the international markets and fluctuations are difficult to predict.

Prices of finished products

Obviously, fluctuations in material prices affect the prices of finished products. But for the end user, of course, it is the price of the final product that counts. Here are some of the questions I am regularly asked to answer.

• Can I get a m² price or a kilo price for materials? It is possible but it will always be a target price. We prefer to calculate a correct price on the basis of correct information. With some exceptions, a few cm more or less are not going to affect the price, so measurements can be rudimentary for a quotation. However if we set a price based on concrete information, you can be sure that the price is firm and fair. Kilo prices are actually only used for series production or for some heavier steel structures.
• How long can prices be held? There are times when the stainless steel prices are very stable for months on end. Then suddenly there will be major fluctuations. Unfortunately no-one has a crystal ball and we can never give clear answers. But, unless circumstances are exceptional, prices can generally be maintained for a few months.
• For all other price queries, just send a simple e-mail to sales@alinco.be. We can usually respond fairly quickly. It is also no problem if someone wants to come to us in person in the case of larger projects.

Scrap prices

The prices for scrap are determined by supply and demand on the international markets. The easiest way to track scrap prices is to take a look at the quotes on the website of De Tijd; they give a good indication. They show the prices for various compositions of iron scrap, as well as the rates for non-ferrous scrap such as copper, stainless steel and aluminium.

Note: iron scrap is quoted in euros/tonne. In the case of non-ferrous scrap, you first have to multiply by a factor of 10 to get a euro price/tonne.

Prices published in the Financieel Economische Tijd should be regarded as target prices for larger quantities (several tonnes). Obviously the quantity, purity and quality of the material play a role in determining the actual price.