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Qingshan Industrial Changes The Global Stainless Steel Pricing Method
Nov 15, 2018

Recently, Reuters reported that Qingshan Industrial, the world's largest stainless steel manufacturer, is preparing to offer fixed-price long-term contracts without alloy surcharges, which may change the pricing of the global stainless steel market.

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The domestic stainless steel coil pricing model has always been varied, from the earliest relative reference to the Taigang stainless steel, Baosteel stainless steel factory price to develop the monthly price model, to adapt to the company's own reality and market environment change, the differential launch week Price, daily price, etc.

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The “base price + alloy surcharge” pricing system used in stainless steel trading activities has a history of more than a decade. In Europe and the United States, stainless steel prices are divided into base prices and alloy surcharges. The base price is calculated based on the operating cost of the steel mill and the ratio of supply and demand in the industry. Basically, it will not change. The alloy surcharge is calculated mainly from the price ratio of the main raw materials required for the manufacture of stainless steel, and is subject to change with the fluctuation of raw material prices.

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In fact, European and American steel mills do not fully implement the pricing system of “base price + alloy surcharge”. (Because of the different business strategies and technical levels of different steel enterprises, the differences in procurement costs and production costs, resulting in different profits between enterprises and other factors, which constitute different market prices), they also implement pricing systems: annual fixed price, semi-annual price Many pricing systems, such as quarterly fixed prices and separate pricing for special projects.

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In addition, downstream users such as stainless steel traders and end users in Europe and the United States continue to raise objections to such pricing systems, arguing that this pricing system is causing aggravation of nickel prices in the process of “selling goods” and increasing nickel prices. The main reason for the increase in market volatility.

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Qingshan is willing to sell flat or hot-rolled steel coils with fixed-price long-term contracts. This cost-plus alloy surcharge method can enable sheet metal processing enterprises to lock production profits by making hedging on cost raw materials and making profits relatively Stable (highly attractive to European and American steel companies). Forcing competitors to abandon steel slabs from the source and choose the company's slabs; in the long run, as the rolling capacity of Qingshan coils increases, competitors may have to follow the Qingshan pricing model to participate in global market competition.


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