Extruders need to change way of pricing: SCM

Jun 04, 2013 | 06:21 PM | Michael Cowden

Tags  Service Center Metals, R. Scott Kelley, LME, pricing, bimonthly, soft alloys, extrusion, distribution OEM

CHICAGO — Soft alloy extruders must reconsider how they price their product in the face of increased aluminum price volatility and short lead times, according to Service Center Metals LLC (SCM) president and chief executive officer R. Scott Kelley.

The market generally prices material on the prior month’s average London Metal Exchange aluminum price plus the Midwest premium and a conversion charge, Kelley said.

The problem is that aluminum prices have been 150 percent more volatile over the past five years than they were in the preceding 10 years, he said. At the same time, lead times are roughly one to two weeks, or even less in some cases, he said.

Complicating matters further is the fact that customers all along the supply chain, who can see changes in LME prices almost immediately, can make sweeping changes to their orders based on its movements, Kelley said in an interview with AMM June 4. ....





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