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Daily alloy extras unlikely in N. America

Keywords: Tags  Outokumpu, stainless steel, surcharges, United States, Canada, Europe, Rey Mashayekhi

NEW YORK — North American stainless distributors expressed doubt that a system to implement a daily alloy surcharge pricing mechanism, such as Outokumpu Oyj’s model in Europe, would succeed in their market.

Espoo, Finland-based Outokumpu said Nov. 1 that the pricing model, introduced via a pilot scheme this past summer, would be introduced and cover all European orders starting Jan. 1. The company said the system will enable customers to "flexibly decide whether to fix the alloy surcharge on the order date or on any other date between the order and midweek prior to the delivery week."

While there has been no indication that Outokumpu’s North American subsidiary or any other stainless producer would implement a similar model in the North American market, U.S. and Canadian stainless distributors told AMM they had doubts whether the system would succeed in North America.

"I think it brings too much instability in the marketplace. ... I’d be very surprised if it was accepted here," one distributor said.

"It could go with you or against you. ... If you do things right and buy at the right time, you could have a very competitive advantage in the market—or a disadvantage, for that matter. I think it would result in a wider spread in pricing for the market," a second distributor said.

"I’ve heard very little talk about it," a third distributer said. "A lot of the stuff (in Europe) doesn’t work over here. It’s probably just Outokumpu—they’re not having the best year."

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