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2014 FORECAST: Outokumpu’s new daily alloy surcharge system explained

January 06, 2014 - 11:17 GMT Location: London

KEYWORDS: Outokumpu , daily alloy surcharge , stainless steel surcharge

Outokumpu’s head of Europe, Middle East and Africa (EMEA) sales, Olli-Matti Saksi, and its director of strategic projects, Paul Schlimgen, explain how its daily alloy surcharge system will work.

Changes to the stainless steel pricing system announced by Outokumpu were put in place to reduce risks related to price volatility, the company told Metal Bulletin sister title Steel First. The Finnish producer announced in November that it would switch to a daily calculation of the prices for alloys used in stainless steelmaking for all its European distributors buying flat products from January 1 2014, as opposed to the current monthly average system. The Espoo-based business posted a loss before interest, taxes, depreciation and amortisation of €52 million ($71 million) for its third quarter of 2013. "Our goal was to give our customers more freedom on pricing decisions. Secondly, we run quite high metal risks with the alloy surcharge that we cannot hedge," Schlimgen said. "Therefore, we wanted to find a system that allowed us to hedge and decrease our losses. Another minor reason was to reduce the high order volatility – for both the customer and...

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