Annex (v)
RAW MATERIALS
All stainless production is now by electric
arc furnace and is based on recycled stainless and carbon steel
scrap. It is not untypical for a melt to have 70% scrap content.
In addition ferroalloys are used to ensure the right balance of
alloying elements, especially Cr, Ni and Mo. The price of these
metals is volatile, especially Ni which is a quoted metal on the
LME. As with commodities generally, prices are high. Currently
Ni is trading at around $14,000 per tonne and did reach over $17,000
just after Christmas. These levels compare with the long run tend
of around $6,500 per tonne. Stainless scrap is also affected by
this volatility with the price following the LME lead. These changes
have a significant effect on the price of stainless steel. For
example, the price for a typical grade of stainless steel, type
304 is currently
2,235 per tonne of which
810 is the alloy adjustment factor which recovers
the increase in alloy costs.
We are also faced with the much higher price
of iron, which has also impacted on both carbon and stainless
scrap prices. From May this year we will be introducing an Fe
element to our alloy adjustment formula which will add a further
50-
70 per tonne.
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