Should Mills Negotiating Away Extras Be Considered?

Steel Market Update received a question from one of our readers regarding a comment we made in Tuesday evening’s issue during our analysis of flat rolled steel pricing. The comment was about the domestic mills negotiating away extras and how this was impacting transactional pricing. All of the indexes are suppose to take into consideration the waiving of extras when producing their averages. This is not always an easy thing to determine and Steel Market Update will spot check to see if the use of waiving extras or using old extras is something that is becoming more common and we will take this into consideration when coming up with the low and high’s of the range for each product.

For steel buyers it is not about the base price, it is about the finished transaction pricing. That is the price the buyer pays delivered to his storage, manufacturing or toll processing facility. The “base price” being quoted is only one of the items on the steel buyers list of prospective negotiable items. The other things which can be negotiated are width and thickness, quality, surface treatment, coating extras and freight. Each one of these must be taken into consideration as combined they equal the final transaction pricing.