Terms related to the price of steel
Steel has become a ubiquitous material in our daily lives.
For steel manufacturers and traders, steel trading is of utmost importance and the price of steel is the focus of their daily attention.
However, many people incur losses because they are unaware of the terms related to steel prices when trading steel.
As a result, there is an increasing demand for information on “what are the terms related to steel prices?”
Based on my knowledge about steel, I can inform you that there are mainly 12 terms associated with steel prices.
Terms related to the price of steel
1. Weighing price
Weight-based pricing refers to the method of determining the weight of steel during the purchase and sale of the material. The actual weight of the steel is accurately measured using tools such as a scale. The price of steel sold based on this actual weight is called weight-based pricing; it is also commonly referred to as weighing price.
2. M price flexibility
In the process of purchasing and selling steel, the method of determining the weight of steel is based on the theoretical weight, and the price of steel sold according to this theoretical weight is referred to as the reference price. This measured price is also known as the adjusted price or adjusted weight price.
Theoretical weight is calculated based on national production standards established for various steel types, materials and specifications. Each steel mill produces various steels according to these standards. However, these standards are not absolute and have permitted deviation or difference, which may result in a discrepancy between the theoretical weight and the actual weight of the steel produced.
Most steel products produced by steel mills have an actual weight less than their theoretical weight. For example, the theoretical weight for many types of steel is one ton, but the actual weight is typically less than one ton. As a result, the reference price, which is based on theoretical weight, is lower than the weight-based price.
The smaller difference, also known as negative difference, represents the difference between the actual weight and the theoretical weight of steel with a theoretical weight of one ton. It is calculated as follows:
Lower difference = (theoretical steel weight – actual steel weight) / theoretical steel weight * 100%.
For example, consider a factory that produces rebar with a diameter of 25 mm. The theoretical weight of this rebar is 1 ton or 1000 kg. However, the actual weight measured during weighing is 0.95 tons, or 950 kg. In this case, the smallest difference for the 25mm rebar produced by the factory can be calculated as follows:
Minor difference = (theoretical weight of steel – actual weight of steel) / theoretical weight of steel * 100% = ((1000-950) / 1000) * 100% = 5, which means there is a 5% smaller difference or 50 kg smaller difference in 25mm rebar produced by the factory.
This type of theoretical weight phenomenon can occur for products such as rebar, welded tubes, seamless tubes, profiles, bars, among others.
3. Price including taxes
VAT invoice price refers to the price at which the buyer requests the seller to provide a VAT invoice for steel products during the sales process. The VAT rate is 17%. In theory, if the buyer does not want the invoice to include VAT, the seller must deduct 17% tax from the price including taxes.
However, in the domestic steel industry, the difference between the price including taxes and the price excluding taxes is not substantial. Typically, the seller offers the buyer a 3-4% discount. For example, if the current price of steel is about 4,000 yuan, the price without tax will be approximately 150 yuan lower than the price including tax.
Whether or not to provide a VAT invoice is commonly referred to as whether or not to provide a ticket. The price including taxes is also known as the ticket price, and the price excluding taxes is referred to as the tax-free ticket price.
4. Acceptance evaluate
Acceptance invoice price refers to the form of payment used during the purchase and sale of steel, where the buyer does not pay in cash to the seller, but pays in the form of an acceptance invoice. The seller incurs interest expense when discounting the acceptance invoice, which is why the acceptance invoice price is generally higher than the cash price.
The difference interval may vary depending on the bank acceptance discount rate and the acceptance invoice term, which is usually divided into one-month, three-month and six-month acceptance.
5. S Elf Collection price
Refers to the price at which the buyer rents a transport vehicle to pick up the goods from the seller's warehouse during the purchase and sale of steel.
6. Direct price from the steel mill
Refers to the price when the buyer places the order directly at the steel mill and delivers it to the location defined by the user, without spot resources.
7. Payment in advance
Prepayment pricing refers to the practice where a steel trading company makes a prepayment to a steel factory or large-scale trader and subsequently purchases the required steel based on its future demand. The general price of steel purchased through advance payment is usually several tens of yuan per ton lower than the spot price.
8. Bulk Discount
When a buyer places a large order for a specific type of steel, the seller may offer a discount of several tens of yuan per ton, depending on the size of the order.
9. Listing Price
Listing pricing policy refers to the pricing strategy used by steel mills or traders to sell certain steel products. In practice, there may be different levels of preference applied in the sales process.
Some steel companies adopt a sales method in which they set the listing price for next month's steel sales at the end of the current month. The actual settlement price for all steel grades is determined based on orders and pickups placed at the end of the current month, using the listing price set at that time.
10. Clearance Price
Some steel companies have a sales method where they set the listing price for next month's steel sales at the end of the current month. This listing price is then used to determine the actual clearance price for all steel grades based on orders and pickups placed at the end of the current month.
The adjustment price represents the real cost price of monthly purchases made by steel traders.
11. Market price
The steel sales market has a variety of transaction prices. The prices shown on this website are market prices, which do not include delivery fees, short-distance shipping costs, short-term financing occupancy fees or other expenses.
12. Onsite Procurement Guide Price
On-site guide price, also known as on-site guide price, is a unique pricing format offered by this website. It is calculated based on the market price, plus the delivery fee, short-distance shipping and short-term financing occupancy rate.
Rebar trading method – difference between adjusting and weighing
Currently, the two main weighing methods used in the domestic steel trade are adjustment and weighing. The adjustment involves calculating the settlement weight of the steel sold, multiplying the overall dimensions of the steel by its proportion. Weighing, on the other hand, is the settlement weight determined by actual weight measurements.
Although weighing is considered more effective in regulating the commercial behavior of steel and in macro-control of the steel industry, adjustment is still widely used due to its ease of calculation (no weighing bridge is required).
The national standard deviation limit for thread deviation is 6 to 12 mm with a 7% limit, 14 to 20 mm with a 5% limit, and more than 22 mm with a 4% limit. However, in practice, small steel mills often exceed these national standards but are still accepted by buyers due to their lower prices. The production costs of small steel mills are higher than those of large steel mills, which is why they compete by producing ultra-low deviation steel. If produced according to national standards, the market price of their products would be at least 60 to 70 yuan higher than that of large steel companies, making them less competitive.
If the steel in the Shanghai steel market was heavy, many small steel mills would probably not be able to operate due to the crackdown on counterfeit products. State macro control over the steel industry aims to eliminate backward domestic production capacity, and the implementation of weighing will reduce the profitability of small backward steel mills and drive them out of the industry.
How to convert steel weighing price and adjustment price?
The formula for the adjustment price is: weighing price * (1 peso deviation). The formula for the weighing price is: adjusted price / (1 peso deviation).
Typically, the actual thickness of the steel is less than the standard thickness, and therefore the theoretical weight calculated based on the standard thickness is greater than the actual weight. As a result, the theoretical price of a product is lower than the weighing price.
For example, if the actual thickness of a standard 2 mm thick hot rolled sheet is 1.82 mm, the theoretical weight of a 2 ton sheet will be 1.82 tons. If the adjusted price is 4,050 yuan per ton, the weighing price will be approximately 4,450 yuan per ton (negative weight tolerance of 9%, calculated as 4,050 / (1-9%) = 4,450.45 yuan per ton).
In general, weighing is used to check weight, resulting in a higher price, while adjustment results in a lower price, as it involves a higher weight. The adjusted steel price will be lower than the weighing price when the steel volume is negative (actual volume is less than the theoretical volume), and the adjusted steel price will be higher than the weighing price when the steel volume is positive ( the actual weight is greater than the theoretical weight).
In general, steel sheets, tubes and H-shaped steel are fitted, while coil plates such as colored steel sheets and galvanized sheets are heavy.
For example, the weighing price is 4,819.28 yuan per ton, the adjusted price is 4,000 yuan per ton, the weighing weight is 0.83 tons, and the adjusted weight is 1 ton. Rebar weight deviation can be calculated as (actual weight – theoretical weight) / adjusted weight * 100%.
Steel Negative Deviation Table
|
Negative deviation of steel plate and strip thickness (mm) |
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|
Steel sheet thickness |
3～ 3.5 |
>3.5 ~4 |
>4 ~5.5 |
>5.5 ~7.5 |
>7.5 ~25 |
>25 ~30 |
>30 ~34 |
>34 ~40 |
>40 ~50 |
>50 ~60 |
>60 ~80 |
>80 ~100 |
>100 ~150 |
|
Negative deviation value |
0.29 |
0.33 |
0.5 |
0.6 |
0.8 |
0.9 |
1 |
1.1 |
1.2 |
1.3 |
1.8 |
two |
2.2 |
|
Negative thickness deviation of wide-wing H-shaped steel (mm) |
|||||||||||||
|
Section height dimension |
H≤220 |
220＜H≤500 |
550＜H |
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|
Flange thickness negative deviation value |
1.5 |
two |
2.5 |
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|
Section height dimension |
H≤260 |
260＜H≤700 |
700＜H |
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|
Web thickness negative deviation value |
1 |
1.5 |
two |
||||||||||
|
Negative Thickness Deviation of Narrow Wing H-Shaped Steel (mm) |
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|
Section height dimension |
H≤120 |
120＜H≤270 |
270＜H |
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|
Flange thickness negative deviation value |
1 |
1.5 |
two |
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|
Negative web thickness deviation |
0.5 |
0.75 |
1 |
||||||||||
|
Negative deviation of common steel I-beam web thickness (mm) |
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|
Model |
≤140 |
>140-180 |
>180-300 |
>300-400 |
>400-630 |
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|
Negative deviation value |
0.5 |
0.6 |
0.7 |
0.8 |
0.9 |
||||||||
|
Negative deviation of common steel channel web thickness (mm) |
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|
Model |
50-80 |
>80-140 |
>140-180 |
>180-300 |
>300-400 |
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|
Negative deviation value |
0.4 |
0.5 |
0.6 |
0.7 |
0.8 |
||||||||
|
Negative deviation of equilateral angle steel leg thickness (mm) |
|||||||||||||
|
Model |
20-56 |
63-90 |
100-140 |
160-200 |
|||||||||
|
Negative deviation value |
0.4 |
0.6 |
0.7 |
1 |
|||||||||
|
Negative Thickness Deviation of Unequal Angle Steel Leg (mm) |
|||||||||||||
|
Model |
25／16-56／36 |
63／40-90／56 |
100／63-140／90 |
160／100-125 |
|||||||||
|
Negative deviation value |
0.4 |
0.6 |
0.7 |
1 |
|||||||||
|
Negative deviation of steel tube thickness (mm) |
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|
Wall thickness |
Hot rolled tube (extruded and expanded) |
Cold drawn (rolled) tube |
|||||||||||
|
≤4 |
>4-20 |
>20 |
≤1 |
>1-3 |
>3 |
||||||||
|
Negative deviation value |
12.5﹪ |
12.5﹪ |
12.5﹪ |
0.15﹪ |
10﹪ |
10﹪ |
|||||||
Construction Steel Adjustment Price Damage
According to the market, the adjustment in the price of steel for construction presents the following risks:
1. Construction steel for weight adjustment seems cheap, but it is actually much more expensive than weighing steel.
For example, the current market price for 12-14mm steel bars is 3,030 yuan per ton. However, there is a price adjustment to 2,940 yuan per ton, making it 90 yuan cheaper per ton.
However, due to the significant discrepancy in the adjustment price of reinforcing steel, a steel mill's smallest deviation in reinforcement price can reach 9%. This means that the actual weight per nominal ton of reinforcement is only 910 kg, which translates into a price of 3,230 yuan per ton when calculated based on actual tonnage. This is 200 yuan per ton more expensive compared to weighted reinforcement, instead of 90 yuan per ton cheaper.
2. Heavy construction steel by design wastes energy.
Some companies employ negative tolerance rolling, which often results in a construction steel yield exceeding 100% and, in some cases, reaching 110% or more. This means that 1,100 kg or more of steel is rolled from 1,000 kg of steel billet.
Although it may seem like a more energy efficient process, it is not. For example, if 1,000 kg of steel billet is used with zero tolerance rolling, 100 pieces of steel can be produced. However, with negative tolerance rolling, 110 pieces or more can be produced, but the additional 10 pieces of steel will consume extra energy.
3. The price of rebar in area a is the lowest in the country through adjustment .
In Area A and the surrounding steel market, rebar prices are based on weight, which is why rebar with lower deviations produced by numerous small steel mills in the north has entered the Shanghai market. On the other hand, in area B, rebars are priced based on their actual weight, which often results in higher prices compared to area A.
It is clear why some northern steel mills are transporting steel bars to area A, where the selling price is lower than in the local area. However, bank transfer trading is only priced based on weight, so the bank transfer price in area A is not lower and in some cases even higher than that in area B. This disrupts the normal market order.
4. Through adjustment , some small illegal steel mills took advantage, while large steel mills suffered losses.
The steel industry is characterized by economies of scale, which means that only with a certain level of economic scale can costs be controlled and reasonable profits can be achieved.
However, small illegal steel mills lack the economic aggregate, technical capabilities and management systems to compete with large steel mills. As a result, they take advantage of deviations to reduce costs. In contrast, large steel mills produce products in strict accordance with national standards, so there is a minimum limit to their costs.
On the other hand, small steel mills reduce costs by cutting costs, which negatively impacts both large steel mills and users. This behavior disrupts the market and harms fair competition.
5. Adjustment is not only a bomb shelter for small illegal steel mills with shoddy steel, but also a parasol for corrupt activities and a breeding ground for bean curd waste.
Because weight is not accurately measured through weighing, it is impossible to guarantee that the weight is sufficient, and there is no standard for determining whether the weight is more or less. This provides opportunities for unofficial negotiations.
Recently, the roof of a Russian swimming pool called “Dolphin” collapsed and reports suggest that poor workmanship and the use of low-quality steel may have been the main causes.
According to user feedback, the negative deviation of the small-sized reinforcements in area A is particularly high, especially for the 10-14mm small-sized reinforcements used as auxiliary reinforcements, most of which have a negative deviation greater than 10%.
