January surcharge news - will our optimism be ill-placed?

With a New Year comes new optimism, and the hope that the market won't be serving up as many 'surprise wet fish in the face’ moments as recent years. Will our optimism be ill-placed, let's find out as we deliver the January surcharge news…….

January has marked one of the quieter months in terms of scrap and alloy surcharge movement (we will discuss energy later), but of the changes observed none of them have been downwards. Grades such as 655M13 (EN36) and 722M24 (EN40B) have felt an increase at around £30/tonne in the last month, whilst others such as SAE 8620 and 605M36 (EN16) have increased by £12 and £4/tonne respectively.

Hillfoot - January 2022 steel surcharges

Contributing to this, scrap surcharge increased by just £10/tonne (up to £391/tonne) which mirrors a general slowing in volatility of scrap over the last 6 months. There has been an almost zero net change in scrap surcharge since July 2021 (£391 vs £388/tonne).

In alloy surcharges, Molybdenum has seen no change from December 2021, and the Nickel surcharge has increased by 3.17%. Chromium, however, is continuing its charge with a further 10.06% increase since December which contributes to a 153.62% 6 months rise. Whilst the Chromium surcharge may have a low impact on the overall cost of low alloy engineering steels, this upward movement has still added £56/tonne and £172/tonne to 709M40 (EN19) and 722M24 (EN40B) respectively over the half year.

Two words you won't hear muttered together at the moment are ‘Energy’ and ‘Stable’. Energy surcharges, in whatever guise they may be dressed up as, continue an aggressive upward trajectory, now exceeding £200/tonne in some cases. And we should remind ourselves that energy related increases have been ZERO until November 2021.

Wholesale costs of gas and electricity throughout Europe are maintaining high pressure on production costs; the H1 2022 outlook suggests the peak is still to come and steel mills will continue to push these unexpected cost increases through the supply chain.