NEW ORLEANS Acerinox SA chief executive officer Bernardo Velázquez Herreros believes that the European stainless alloy surcharge system "has passed away," although other stainless steel producers still see a future for the system.
Madrid-based Acerinox now primarily uses European surcharges for internal purposes, although his company is still happy to use the surcharge system in the U.S. market through its Ghent, Ky.-based subsidiary North American Stainless Inc. (NAS), Velázquez said last week at the annual conference of the International Stainless Steel Forum (ISSF) in New Orleans.
"The alloy surcharge system in Europe has passed away," Velazquez said.
Philippe Darmayan, chief executive officer of Luxembourg-based Aperam SA, acknowledged that customers had questioned the system recently when surcharges increased as London Metal Exchange nickel prices fell.
"The only thing we say there is that there a problem in the system," he said. "I am discussing this with each of our customers, though I think we have consensus that something is not normal."
However, Clemens Iller, president and chairman of Terni, Italy-based Acciai Terni Speciali SpA, said that the European surcharge system could work more effectively as market conditions improve.
"The alloy surcharge system is not really the problem; the problem is overcapacity," Iller said. "It had a very good function in the past, so if we can solve the one problem, we could see it maintained. It was a fair way for customers to see what charges on the alloys were, so Im not against it."
Darmayan acknowledged during the panel session that the issue is "a delicate subject, and we do not agree."