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The 411 on Scrap Steel Surcharges

Companies are held hostage to fluctuating scrap steel surcharges. Recycled options eliminate that pain point.

Scrap steel recycling surcharges are typically applied to cover the costs associated with processing and recycling scrap steel – one of the key materials in the manufacturing of virgin steel shot. These surcharges can vary depending on several factors, including the type of scrap steel, market conditions, processing techniques, and environmental regulations. Because the cost impact of these factors can be significant and is difficult to predict, steel shot pricing can vary widely from one month to the next—a headache for the shot manufacturers and purchasing agents alike. 

Incorporating recycled steel shot eliminates fluctuating scrap steel surcharges, it is not only the most cost-effective choice for shot peening operations, it also eliminates price inconsistency.  

Here are a few key insights into scrap steel surcharges:

1. Raw Material Cost Variation:  The price of scrap steel can fluctuate based on market conditions, supply and demand dynamics, and factors like global economic trends, trade policies, and natural disasters. These fluctuations can impact the overall cost of producing steel.

2. Surcharges Calculation:  Steel producers often calculate scrap steel surcharges using formulas that take into account the current market price of scrap steel and other relevant cost factors. The surcharge may be updated periodically, such as monthly or quarterly, to reflect changes in raw material costs.

3. Pass-through Costs:  Many steel manufacturers and suppliers pass these surcharges on to their customers by adjusting the prices of steel products accordingly. This means that when scrap steel prices rise, customers may see an increase in the prices they pay for steel products.

It’s important for businesses to communicate clearly with their customers about how scrap steel surcharges are calculated and applied. Transparent pricing practices help build trust and ensure that customers understand the factors influencing steel prices.

If you’re interested in how your company might avoid the inconvenience of surcharges on your steel shot purchases, visit Wisdom’s Sustainable Steel Shot page or Contact our team for more information. 

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