STORY

How to handle rising steel prices with confidence

Between early 2016 and March 2017 steel prices increased by an average of about 75 percent. The German Industrial Association of Sheet Metal Forming (IBU) believes that this cost explosion might lead to delivery problems among suppliers. We can help you ensure a reasonable amount of flexibility in handling raw materials.

Price shock for metal forming companies: steel 75 percent more expensive

According to Stahlmarkt Consult, the dramatic price increases have mainly been caused by steep rises in raw material prices (iron ore and coke) and an unexpectedly robust steel market in China which has led to shortages of materials. Metal forming companies are currently paying about EUR 220 more per tonne. They are immediately affected because the material costs of their products often reach 60 percent or more. Bernhard Jacobs, CEO of the German Industrial Association of Sheet Metal Forming (IBU), strongly warns of disruptions in the supply chain, as suppliers cannot cope with the current steep price increases on their own. At the same time he appeals to customers to honour a reliable supply.

Securing prices and materials for defined periods of time

With material costs accounting for 20 to 70 percent, depending on the component, SOLVARO is also affected by this development. To give you, our customers, a bit of flexibility and control in dealing with raw material, and thus also with costs, we conclude framework agreements based on raw materials, not specific products. You benefit from the flexibility of such a contract, as you purchase your material at a fixed price, leaving you free to decide for which of the ordered products you want to use the material. This means that a certain material quantity and price are fixed for a specific period, regardless of any product-specific orders. You decide when to request this material and for which products. This gives you a bit more leeway when it comes to purchasing costs.

The solution at a glance

  • Framework agreements based on raw materials
  • Flexible decisions on the use of materials 
  • Freedom in combining materials and products

Our framework agreements are based on raw material, giving our customers flexibility in handling steel orders.

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