If you trade carbon steel (HRC/Rebar), you look at Iron Ore prices.
If you trade Stainless Steel, looking at Iron Ore is useless. You must look at the LME (London Metal Exchange).
Stainless steel pricing is unique because it changes every single month based on a mathematical formula. This is called the "Alloy Surcharge."
Today, we decode why your quotation expires in 24 hours.
1. The Formula: Base + Surcharge
Unlike other products with a fixed price tag, STS has a "Floating Price" structure.
💰 The STS Price Equation:
Final Price = Base Price + Alloy Surcharge
2. Why Nickel is "God" (The 8 vs 60 Rule)
In a standard 304 grade coil (18-8), Nickel accounts for only 8% of the weight.
But financially? It accounts for nearly 60% of the raw material cost.
- Iron Price: ~$100 / ton
- Nickel Price: ~$16,000 / ton (Approx. 150x more expensive!)
The Sensitivity Rule: Even a small fluctuation in Nickel shakes the entire STS market. This is why traders wake up checking the LME Nickel graph.
3. Simulation: How to Predict the Price
Traders don't guess; they calculate. The Surcharge is usually based on the Average LME Price of the Previous Month (M-1).
| LME Trend (This Month) | Surcharge (Next Month) | Trader's Action |
| Nickel Rising 📈 | Will Increase | BUY NOW. Lock in the current (lower) surcharge before the 1st of next month. |
| Nickel Falling 📉 | Will Decrease | WAIT. Delay the PO until next month to get the cheaper price. |
4. Exceptions: 430 and 316L
Not all stainless steel follows Nickel.
- STS 430 (Ferritic): Contains 0% Nickel. It is driven by Chrome prices. It is much more stable and cheaper than 304.
- STS 316L (Marine Grade): Contains Molybdenum (2%). Moly is even more volatile than Nickel. If Moly spikes, 316L surcharges explode, even if Nickel is flat.
Final Thoughts: The "Validity Date" Trap
Because Surcharges change on the 1st of every month, an STS quotation is never valid for "30 days."
If you quote a customer on January 28th, you must warn them:
"This price is valid only for 3 days. On February 1st, a new Surcharge applies."
Ignoring this rule is the fastest way to lose your margin.
Next: The Art of Surface Finishes
👉 [STS #4] The Art of Surface: 2B vs BA vs No.4⚖️ Disclaimer & Privacy Notice:
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