LONDON Finnish stainless steel maker Outokumpu Oyj expects to announce the outcome of its daily alloy surcharge pilot program in Europe in the next two to three months, a company executive said Sept. 3.
The testing phase is still continuing, Kari Tuutti, executive vice president of marketing, communications and investor relations, said at AMM sister publication Metal Bulletins 12th International Stainless and Special Steel Summit in London.
"Customers can choose to fix the price closer to the delivery date if they want," Tuutti said. "(This means) less volatility. It should bring more stabilization to the price and less speculation. We will announce how we plan to roll this out further in the next two to three months."
However, Stemcor Stainless managing director Tony Lockley told delegates at the event that the daily surcharge system could make distributors more cautious about stock levels.
"For distributors, the daily surcharge system is a nightmare and they will increase their reduction of stock. There needs to be a lot of thought about that," Lockley said.
Outokumpu rolled out plans to test a daily system in May in a bid to reduce price volatility (amm.com, May 22).
The debate on the need for a change in the current European stainless pricing system has been heating up since last September, as nickel price volatility continues to affect participants in the sector.
Meanwhile, Outokumpu also is reviewing its service center strategy, with an outcome expected by year-end, Tuutti said.
"By the end of the year we will decide on the right balance between service centers standing on their own and being profitable, and at the same time being close enough to our customers," he added.
Outokumpu is in the process of selling some of its service centers in Italy and Germany as part of its divestment of Acciai Speciali Terni SpA.
A version of this article was first published in AMM sister publication Steel First.