As the Filame Group does every month, we have consulted our panel of suppliers in order to estimate as accurately as possible the development of the price of the alloy surcharges for the stainless steels that the Filame Group uses on a regular basis.

For the month of May, there was a very significant increase, sometimes of more than 10%, for the various alloy surcharges.

Tensions in the markets have not calmed down and international events, especially the war in Ukraine, which has become a long-term problem, have not really evolved.

It should be noted that all suppliers also apply an energy surcharge of up to €120/ton to account for the increase in energy costs. This surcharge is in addition to the energy surcharge of about 250 euros/ton that has been effective since the beginning of the year.

Filame recalls that the price of the alloy surcharge is set from month to month by the various suppliers according to the quality of the stainless steel they supply.  Thus, there may be differences among the various suppliers, but the trend is the same among all of them.

Moreover, the applicable price is the one on the day when the material is delivered. Therefore, there may be variations in these pices between the time of order and the time of delivery, especially since delivery times are still very long.

Filame therefore draws the attention of its customers to the fact that, if necessary, depending on changes in the price of materials and the time of delivery thereof, it may have to adjust the prices of current quotations/orders versus the time of the quotation/order itself.

Against the backdrop of the war in Ukraine and strong tension on the price of nickel, especially after the suspension of the LME at the beginning of the month, which caused the price of a ton of nickel to rise by €14,000/T over one month (an increase of about 69%), the price of the alloy surcharge for all grades has risen sharply, after a slight downturn in February and March.

It should be noted that the price of the alloy surcharge is set on a month-to-month basis by the various suppliers according to the grades of stainless steel they supply.  There are therefore differences between the different suppliers but the trend is the same for all of them.

This increase in the price of extra alloy, coupled with an increase in the price of steel, will lead to strong increases in the prices of the different grades of stainless steel.  These increases will of course vary between suppliers and wholesalers depending on the type of packaging (sheet, coil, wire), the quantities and dimensions requested, the rolling or work hardening qualities, etc.

In order to keep its customers regularly informed about the evolution of material prices, and in particular steel and stainless steel prices, Filame regularly questions its panel of suppliers to get their forecast on the evolution of prices over the next weeks and months.

As reported by Het Staaljournaal, the events in Ukraine have created chaos on the steel market.  This was compounded by the problems with nickel on the LME, which led to a suspension of the nickel price.  Trading did not resume until the end of last week.  At the same time, these events also had a significant effect on the price of energy and therefore on the production prices of steel, stainless steel and aluminum, whose production requires large quantities of energy, even though the upward trend in energy had begun with the events in Ukraine.  The aluminum market is also strongly impacted.

In this context, several steel mills are maintaining high prices and offering reduced tonnages for hedging purposes.  Moreover, as some buyers, especially those who did not replenish their stocks in previous months after last year’s difficulties, are trying to obtain new stock for fear of running out later, there is an effect on demand that is also pushing prices up.

It is therefore difficult to predict with a reasonable degree of certainty the evolution of the price of steel and stainless steel materials and their availability.  Prices are often set on a day-to-day basis according to availability and there is often no way to obtain commitments in this regard for periods longer than 24 hours.

Filame’s supplier panel reports a price increase of € 410/430 per ton of steel.  For spring steel wire the increases are about 450 €/ton.

As for stainless steel, although the alloy surcharge continued to rise in March, the effect of the nickel crisis on the LME has not yet been reflected in the price.  We will have to wait for the indications for April and May, knowing that the price of extra alloy is set monthly.  Nevertheless, the increase in the price of steel will already have an influence on the price of stainless steel, whose share of steel in the price represents between 40 and 50% of the total price.

In this context, Filame indicates that its price offers are subject to changes in the price of the material and that, depending on the date of the order compared to the date of the offer, Filame may have to adjust its prices according to the purchase price of the material at the day of its delivery.

Unfortunately, the beginning of 2022 did not result in a decrease in material prices or even a slowing down of the price increase.

At the beginning of the year, the trends observed at the end of 2021 continue in the same direction and to this is added the increase in energy prices.  Several steelmakers and stainless steel foundries are starting to apply an “energy and carbon tax” to pass on the sharp rise in energy costs and the additional costs associated with the new regulations on C02 emissions.

Having reviewed its supplier base, Filame expects the following price increases in the coming weeks:

– SH spring steel wire : increase of 150 € / ton

– Hardened C75 steel sheets and coils : increase of 200 € / ton

– Stainless steel : increase of the steel part (excluding alloy surcharge) by €700/tonne and “addition of an energy and carbon tax” from €235 to €250/tonne

As for wire and spring steel, as these prices are fixed every six months, there should be no further increase before 1 July 2022.

The price of other materials is much more variable and in particular the price of stainless steel depends on the alloy surcharge, which is set monthly.

A decrease in the price of stainless steel is not to be expected.  Even if the steel component of stainless steel does not increase at the same rate, the alloy surcharge component, which varies from month to month, continues to increase at impressive rates.  The prices of chromium and nickel, the main metals that make up the extra alloy, are still under strong pressure on the international markets.

Of course, the price of a given material, both wire and flat, also depends on the desired quantities (MOQ) of wire diameters or thicknesses (drawing and winding costs or rolling and slitting costs).

Filame recommendations

Filame makes every effort to try to satisfy its customers to the best of its ability according to the availability of its stocks and those of its suppliers. To mitigate the effects of the situation Filame has developed a very large supplier base for both the most common steels and stainless steels. But the inventory status at suppliers is extremely low and it is not always easy to find material within acceptable deadlines.

Filame cannot currently guarantee either the delivery times requested by its customers or the maintenance of prices from one order to another or from one month to the next. In particular, Filame will be obliged to pass on the increase in material costs according to the stocks of material that it can find on the market and the prices obtained from its suppliers.

Filame asks its customers to send their order forecasts sufficiently in advance to allow them time to find the material necessary to meet their needs, while avoiding over-ordering in order not to worsen the overall situation. Filame asks her clients not to hesitate to contact her so that together we can analyze the situation and the best way to act.

Filame also recommends that its customers order promptly after receiving an offer to avoid a price increase between the time of the offer and the time of ordering. The delivery times indicated in an offer are given to the best of Filame’s estimates but cannot currently be considered as a firm commitment.

This is a never-before-seen situation that all contractors like Filame face and which is beyond their control. We regularly publish on our website (www.filame.com) and on our Linkedin page (do not hesitate to follow us on this page) news relating to the development of this situation.

The price of the alloy surcharge (share of chromium and nickel) in the price of stainless steels continues to rise with no easing in sight.  This share constitutes more than half of the cost of stainless steels.

Moreover, it should be remembered that the price of stainless steel is that of the day of delivery with the price of the current month’s alloy surcharge.  Suppliers can no longer afford to offer locked-in prices for periods longer than a few days in view of the volatility of prices.

Finally, tensions on delivery times remain high and it is not uncommon to have delivery times fixed at several months for certain grades of stainless steel.

According to its various suppliers and the suppliers it met at the BLECH in Stuttgart last week, Filame thinks that further increases in material prices are to be expected, particularly for strip (sheet and coil):

• For steels (spring and non-spring), the increase would be €250 to €300 / tonne from January 2022.
• For 304 stainless steel, an increase of about €700/tonne is expected from week 45
• Furthermore, for 301 and 304 stainless steel, the alloy surcharge (the price of which is set on the day of delivery) continues to rise and to influence the price of these materials upwards.  This increase is mainly due to the rise in the price of nickel.

The various suppliers consulted by Filame cannot predict the duration of the upward movement or predict when prices might stabilise.

Delivery times remain relatively long.  Filame therefore urges its customers to plan their orders sufficiently in advance to enable Filame to continue to anticipate its purchases and to continue to keep delivery times as reasonable as possible.

Import volumes of basic steel (ST37 style for construction) into the EU rose sharply in the 3rd quarter. This massive influx of rolled material from Russia, India, Vietnam – but not from China, which has reduced its capacity – attracted by the high price level in Europe is a first threat to the high price policy that the major European steel producers are currently pursuing. They want the current price level to be maintained as much as possible, but this may prove more difficult for these basic steels.

It is not only these higher import volumes than in previous months that are putting pressure on market prices due to the reduced scarcity of basic steel, but there are also other factors that are causing a downward price trend.

First of all, there are the major problems faced by car manufacturers in the embarrassing shortage of semiconductors. In August alone, EU production was down by 19% compared to August 2020. This affects not only steel sales to carmakers themselves, but also to their suppliers. For the time being, no solution to this problem can be expected in the foreseeable future and the sector’s need for steel will therefore not improve immediately.

In the meantime, steel mills continue to produce their orders from the automotive industry, which means that stocks are increasing at the above-mentioned distributors.

In addition, the steel market is faced with stable to slightly falling scrap prices and a drop in iron ore prices in recent weeks. This is due to the decrease in production capacity that has been implemented in China. The Chinese government has decided that total steel production in 2021 should not exceed that of the previous year. This decrease in production has had an influence on the demand for ore, the price of which has fallen in the last month.

On the other hand, the largest mills in the EU claim to be full for this year, although the smaller mills in Central Europe are still offering some tonnage here and there for delivery in November-December. In Belgium and Germany, mills produced less steel in Q1, Q2 and Q3 consciously or due to technical or maintenance problems, which also increased scarcity.

However, these elements only concern basic steels. It should be noted that the more specific materials, which are in greater demand, such as precision steels, galvais, stainless steels and spring steels, remain rare and in short supply. Suppliers and intermediary resellers do not see an immediate decrease in the shortage and therefore in prices. Moreover, as soon as the current slump in the automotive sector has subsided, tensions could increase again.

The experts’ opinions on the price development vary considerably on this subject. Some experts believe that we will see lower prices during this month and next, but that an upward trend is to be expected thereafter. Others believe the opposite, that the boom in price rises is definitely over and that a downturn will follow in which the base price will fall.

There are arguments for and against both views. There are many ongoing developments that could affect the steel price: How much further will the economy grow? When will car production increase again? Will the EU import quota system be revised or not? Will European domestic steel production increase or stabilise? Will iron ore prices fall again or not? Will there also be a possible rise in interest rates, which could negatively affect the willingness to invest?

This means that it is difficult at present to make a clear prediction on the expected price development, but we should certainly not count on a price decrease in the short term, especially for non-basic steel.

The pressure on delivery times has not abated either and there are no indications that the current situation will change in the short term.

Filame therefore recommends that its customers carefully plan their requests for the production of parts taking into account the delivery times of the material and to possibly have price adaptations according to the time of delivery of the material, especially as no supplier currently commits to prices over several days and that for stainless steel the price of the alloy surcharge is that of the day of delivery of the material.

Summary of Noviostaal – het staaljournaal September and Filame supplier reviews

The prices of raw materials (steels, stainless steel, aluminum and special alloys) continue to increase and delivery times are getting longer. What should we expect and what are Filame’s recommendations?

Since the 3rd quarter of 2020 the price of raw materials, whether steels, stainless steel, aluminum, special alloys, have increased significantly. At the same time, delivery times have grown considerably.

We ask our customers to pay attention to the recommendations that Filame makes at the end of this newsletter. Indeed, the most recent projections given by all industry players show that this situation is not going to end.

Price increase

The following chart for hot-rolled steels shows the extent of the increase.

In terms of stainless steel, the alloy surcharge (that is to say the cost of the share of nickel and chromium) which varies every month is also increasing sharply, which means that the prices of stainless steel, in all qualities reached record levels.

The forecasts for August and September show a persistent increase.

In this regard, it must be taken into account that the price of the alloy extra is that of the month of delivery. Between order and delivery, there may therefore be price increases that manufacturers will have to pass on.

These price increases are also caused by the strong dependence of European markets on Asian producers and the situation prevailing in these markets. Taiwan, Korea and China no longer export or almost no longer export stainless steel to Europe and stocks of European producers are at their lowest (see details in New Letter from nova Trading attached).

Delivery times

Delivery times have become extremely long. For stainless steel, most producers are already not accepting orders for 2021.

Added to this is the increased delays in container shipments from Asia (in addition to the increase in the price of such shipments). For these reasons, it is not uncommon to see delivery delays or even cancellations by some producers or distributors.

Special alloys, such as aluminized steel, Inconel, Nimonic, Elgiloy are very difficult to obtain. For more details, see the Nova Trading Newsletter below.

Filame recommendations

Filame makes every effort to try to satisfy its customers to the best of its ability according to the availability of its stocks and those of its suppliers. To mitigate the effects of the situation Filame has developed a very large supplier base for both the most common steels and stainless steels. But the inventory status at suppliers is extremely low and it is not always easy to find material within acceptable deadlines.

Filame cannot currently guarantee either the delivery times requested by its customers or the maintenance of prices from one order to another or from one month to the next. In particular, Filame will be obliged to pass on the increase in material costs according to the stocks of material that it can find on the market and the prices obtained from its suppliers.

Filame asks its customers to send their order forecasts sufficiently in advance to allow them time to find the material necessary to meet their needs, while avoiding over-ordering in order not to worsen the overall situation. Filame asks her clients not to hesitate to contact her so that together we can analyze the situation and the best way to act.

Filame also recommends that its customers order promptly after receiving an offer to avoid a price increase between the time of the offer and the time of ordering. The delivery times indicated in an offer are given to the best of Filame’s estimates but cannot currently be considered as a firm commitment.

This is a never-before-seen situation that all contractors like Filame face and which is beyond their control. We regularly publish on our website (www.filame.com) and on our Linkedin page (do not hesitate to follow us on this page) news relating to the development of this situation.

Nova Trading Newsletter

Nova Trading News – EN – 06 07 2021