Several steel mills in Europe close their doors

A report from the GMK Center indicates that steel production in Europe has been reduced by 11.7 million tonnes, which is a decrease of 6.7% compared to July of last year (2021).  This decrease is due to the closure of several steel mills in Europe, including several of the Arcelor Mittal Group.  At the beginning of September, some fifteen steelworks were shut down.

The closures are due to the increase in the price of energy, which means that producers are no longer able to cover their production costs and are unable to pass on cost increases to their customers, despite the energy surcharges applied by most players.

These closures are in addition to those already announced, such as the closure of the Aperam stainless steel foundry in Genk.

This reduction in supply will eventually have an effect on the price of steel.  It is therefore not to be expected that prices will fall in the coming months.

Alloy extras for stainless steel continue to fall in price (August 2022)

As the Filame Group does every month, we have consulted our panel of suppliers to provide the most accurate estimate possible of the evolution of the price of alloy extras for the stainless steel grades that the Filame Group uses on a regular basis.

In June, after the surge in May, we saw a drop in prices for the first time. The downturn continued slightly in July.

The decline continued in August.

This seems to reflect a decline in economic activity that began to be felt in June and which is due in particular to the various geo-political events. Economic activity in China has continued to decline and so has demand.
This movement does not mean that we will return to the prices that prevailed in 2019. Indeed, demand for nickel in particular remains very strong and is driven by the demand for this metal in the battery industry.

It should be noted that all suppliers still apply an energy surcharge to take into account the increased energy costs. This surcharge, in turn, continues to rise. The Russian gas crisis is likely to continue to exacerbate the pressure on energy prices.

As a result, the price of stainless steel will not fall in the same way as the price of alloy surcharge.

In addition, large users had hedged their bets during the very sharp increases in the first half of the year and have stocks and contracts to deliver at higher prices than they could obtain today in spot purchases.

Filame points out that the price of alloy surcharges is set month by month by the various suppliers according to the grades of stainless steel they offer. There are therefore differences between the various suppliers but the trend is noticeable for all of them.

Furthermore, the price is set on the day the material is delivered. There may therefore be differences between the time of ordering and the time of delivery, especially as delivery times have not decreased.

It should also be noted that the figures below are a general trend among steel manufacturers and that the price among slitters, wire drawers or wholesalers varies according to the quality requested, the nature of the product (sheet, coil, wire), the quantities requested, the thicknesses or diameters of the wire and the packaging.

With over 20% of its turnover from civil engineering machinery, forklift & industrial vehicle, The Filame Group has extensive expertise with global and European leaders in these industries.

For this sector, Filame mainly manufactures a set of laser cut parts or mechanical press (shim, washer) and a set of sheet metal parts and welded assemblies. The Filame Group masters the wide range of the control and exigence systems needed for clients such as Caterpillar.

From the unit to several million pieces, Filame offers a comprehensive solution. Whether you are in a planning phase and need our expertise or already have your final plans and specifications, we are here to help you.

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Alloy surcharge prices continue to fall (July 2022)

As the Filame Group does every month, we have consulted our panel of suppliers to provide the most accurate estimate possible of the evolution of the price of alloy extras for the stainless steel grades that the Filame Group uses regularly.

In June, after the surge in May, we saw a drop in prices for the first time.

In July, we can see that the slight downturn continues.

This seems to reflect a drop in economic activity that began to be felt in June and which is notably due to the various geo-political events.

This movement does not mean that we will return to the prices that prevailed in 2019.  Indeed, the demand for nickel in particular remains very strong and is driven by the demand for this metal in the battery industry.

It should be noted that all suppliers still apply an energy surcharge ranging from €235/tonne to €385/tonne to take into account the increased energy costs. This surcharge, however, is not decreasing.

Filame reminds us that the price of the alloy surcharge is set month by month by the various suppliers according to the qualities of stainless steel they offer.  There are therefore differences between the various suppliers but the trend is noticeable for all of them.

Furthermore, the price is set on the day the material is delivered. There may therefore be differences between the time of ordering and the time of delivery, especially as delivery times have not decreased.

It should also be noted that the figures below are a general trend among steel manufacturers and that the price among slitters, wire drawers or wholesalers varies according to the quality requested, the nature of the product (sheet, coil, wire), the quantities requested, the thickness or diameter of the wire and the packaging.

Filame also draws the attention of its clients to the fact that, if necessary, it will have to adapt its prices in relation to the time of the order, depending on changes in the price of materials and the time of delivery.

Alloy surcharge prices for stainless steel fall for the first time (June 2022)

As the Filame Group does every month, we have consulted our panel of suppliers to provide the most accurate estimate possible of the evolution of the price of the alloy surcharges for the stainless steel grades that the Filame Group uses on a regular basis.

For the month of June, after the surge in May, a drop in prices was noted for the first time in June.

It is too early to say whether this reflects a lasting downward trend in the markets, but the trend follows the one observed for steel prices.

It should be noted that all suppliers still apply an energy surcharge that varies from 235€/tonne to 385€/tonne to integrate the increase in energy costs.

Filame reminds that the price of the alloy surcharge is fixed month by month by the different suppliers according to the qualities of stainless steel they offer.  There are therefore differences between the various suppliers, but the trend is noticeable for all concerned.

Furthermore, the price is defined on the day the material is delivered. There can therefore be differences between the time of the order and the time of delivery, especially since delivery times are still quite long, even if they are stabilizing.

It should also be noted that the figures below are a general trend among steel manufacturers and that the price among slitters, wire drawers or wholesalers varies according to the quality requested, the nature of the product (sheet, coil, wire), the quantities requested, the thickness or diameter of the wire and the packaging.

Filame also draws the attention of its customers to the fact that it still may have to adapt its prices, if necessary, according to the evolution of the price of materials between the time of the order and the time of the delivery.

Towards a decline in steel prices?

While steel prices rose until March, they stabilised in April and fell slightly in May.

Is this the beginning of a longer-term general trend? It is still too early to say.

The various steel suppliers on Filame’s panel have reported a drop in orders for these products over the last four weeks.

They explain this on the one hand by a car market that is clearly down, notably due to the shortage of components.  Other factors such as the war in Ukraine and the prolonged lockdown in China which has brought many companies to a standstill are also cited as having some influence.  All this has led to a drop in demand which has had a downward influence on prices.

Thus, while hot rolled coils were trading between €1330 and €1450/tonne in March and April, prices in April were more in the region of €1200/tonne. For cold rolled coils the price is just below 1300 €/tonne.  Wire follows the same trend.  Of course, one has to pay attention to the qualities and quantities desired, which also have an influence on the price level.

It is not possible to say for the moment whether stainless steel prices will follow the same direction.  Indeed, while the steel component may decrease, the alloy surcharge, which currently represents about 60% of the price, had risen sharply again in May.  Stainless steel prices are therefore much more linked to the evolution of Nickel and Chromium prices for which demand remains very strong.

The price of alloy surcharges for stainless steel is rising again

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.

The price of alloy surcharges

New sharp increase in the price of alloy surcharge for stainless steel

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.

Evolution in table and graph form

What can we still predict in terms of the evolution of steel and stainless steel prices?

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.

Further increases in material prices in 2022

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.

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Price development of alloy surcharge for stainless steel – Januari 2022

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).

Price development of alloy surcharge for stainless steel

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.

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