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Alloy Surcharge Information

December 21, 2007

 

Dear valued customer:

 

As you may be aware most foundries use alloy surcharges to avoid having to re-quote the parts they produce every time the price of the metal fluctuates, and to allow long term orders to be established without suffering the overhead cost of changes to the orders when the alloy price changes.  Sure Cast has been using this system for many years and it is noted on all the quotes we submit.

In using alloy surcharges, the foundry quotes a part with a base alloy cost from a time frame when the material costs were more stable, or from a recent time frame, if pricing has not been stable in an extended period of time.  When a RFQ is received the foundry will quote the part using that base material cost, when they receive an order it will be processed according to the quote.  Then at the time of invoice the difference between the quoted alloy cost and the actual alloy cost is calculated and added to the invoice as a separate line item on the invoice.

In the last couple of years the price of metal has been increasing; some alloys have risen only slightly while others have more than doubled, thus causing the surcharge for those parts to be very high, in some cases exceeding 50% of the part cost.

After numerous customer requests, and in an effort to ensure our quoted pricing is as close to the actual invoice cost as possible, Sure Cast will be changing its base alloy prices to reflect a current alloy cost that will be effective January 1st, 2008.  This change will result in a higher quoted piece price and a lower alloy surcharge, which should not have a drastic change on the final overall cost of the castings.

All new orders processed after 12/31/2007 will be re-quoted to reflect the new base material cost and thus will reflect the lower alloy surcharge at the time of invoice.  Existing orders or orders processed prior to 1/1/2008 will be processed as they have been in the past.

We appreciate your patience with the transition from the old base alloy cost to the current alloy costs.  We feel this change will best serve our customers by ensuring the quoted price of the part is as close to the actual invoice price as possible.

If you have any questions or require further information, please feel free to contact me at your convenience.

 

Sincerely,

Craig Sanders

Customer Service Manager

March 1, 2004

 

Dear Customer:

 

       As you may be aware recently we have seen unprecedented run-ups in the price of raw materials that make up the metal we pour most castings from.

        Please see below information showing the extreme price changes mentioned above.  As you can see the price of the raw material we make your castings from has become very volatile.  To give you an idea of the change we have previously been paying $0.65/lb for the 17-4 material, $0.85/lb for the 316SS material and $0.80/lb for the 304 material that is now $0.88/lb, $1.69/lb, and $1.40/lb respectively.

       Many people have asked what does this mean for the near future and for the rest of the year.  I have spoke to several our material suppliers and none of them will venture a guess at what is going to happen to the alloy prices over the next few months more less for the next year, thus I cannot venture one for the casting prices at this time.

       Due to the volatile conditions of the current market in the prices of nickel, chrome, moly, copper, cobalt and ferrous scrap, we are forced to implement alloy surcharges for most of the alloys we pour.

       As per our quotes the piece part price is based on 1/1/2003 alloy cost and surcharges implemented will be based on that cost as well.

       To help you get a handle on the cost impact of the parts produced for your company, below you will find a list of the alloy surcharges for many of the alloys poured, if you multiply the surcharge times the weight of the part you can see the effect on the piece price.  A new list will be sent out every month when there is a change in the cost of the materials.

       The surcharge will show as a separate line item on the invoice, if this creates problems with your accounting systems please let us know as soon as possible so details can be worked out that will allow implementation within your systems.

       If you have any questions or require further information, please feel free to contact me or you local sales person at your convenience.

 

Sincerely,

Craig Sanders

Customer Service Manager