We have been approached by an increasing number of readers and customers asking why European stainless steel mills are once again charging base prices plus alloy surcharges. We took a closer look.

Sharp price increase for 430/1.4016 stainless steel from the end of March 2021?
Many participants in the stainless steel market look exclusively to the nickel price as the main indicator of price trends. After nickel slumped by almost 14% in February – we reported – it was widely assumed that stainless steel prices would now also fall.
However, as important stainless steel grades such as 430/1.4016 contain no nickel or 304/1.4301 has a nickel content of only 8%, their final prices are not solely dependent on this metal.
We have taken the development of Ferrochrome as an example. Ferro Chrome is included at 18% in 430/1.4016 just as it is in 304/1.4301. And an important indicator in the alloy surcharges of stainless steel mills.
Ferro Chrome prices exploded at the end of 2020
Ferro Chrome prices have increased significantly since the end of 2020 and throughout Q1 2021. Our market data shows a 37% per ton increase in Chinese High Carbon Ferro Chrome. While the benchmark price for Ferro Chrome was $1.175/lbs in the EU on December 31, 2020, market participants say it could go as high as $1.60/lbs. Which would be similar to the increase for Chinese high carbon Ferro Chrome.
Where did this dramatic rise in FeCr prices come from?
In our article on alloy surcharges for March 2021, we had already referred to the increased Ferrochrome prices. As availability in China, the world’s largest chrome ore supplier (followed by South Africa), was severely curtailed in January. In Ulanqab, a major production center for ferro alloys in China, all small smelters were ordered to shut down their furnaces.
In addition, there are reports that South Africa will impose export taxes on chrome ores. And these would be already decided thing, but the details are not yet fixed.
The Chinese shortage and the South African taxes have sent ferrochrome prices shooting up through the first quarter. Currently, they seem to have settled at a stable plateau.
What impact will this have on stainless steel prices?
In the case of the nickel-free 430/1.4016 with a chrome content of 18%, price increases in Ferro Chrome have a lasting impact. But the price of nickel-bearing 304 (and other stainless steels), which has a similar chrome content to a 430, is also likely to be affected.
Why the alloy surcharge is becoming important again for steel mills?
Now that nickel is no longer given as much weight in the stainless steel price, raw material prices have skyrocketed worldwide, and the stainless steel price can no longer be calculated by the steel mills on a whim, we would like to conclude by passing on the question and also a possible answer:
Why is a base price with alloy surcharge suddenly becoming interesting again for stainless steel producers in Europe?
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