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Mac Metals Pricing and Metals Volatility

Mac Metals Pricing and Metals Volatility

A frequently asked question from customers purchasing brass, bronze and nickel silver extrusions is:  “What does ‘price date of shipment’ mean?”

Mac Metals prices its brass, bronze and nickel silver extrusions under the term “price date of shipment” which means that the price quoted, or acknowledged will be changed on the day of shipment to reflect changes in metals pricing.  Mac Metals goal is to make money converting metal into a product and not on the price of the raw material.

Pricing Volatility and ‘Price Date of Shipment’ Fairness

Movement in metal pricing get passed on to the customer, limiting the exposure of metal price volatility.  This is a standard practice in pricing for all domestic brass mills and should not be considered a competitive advantage.

There are three metal pricing approaches in the brass mill industry.  Price date of shipment is the industry standard but it is helpful to understand all three.

  1. Price date of Shipment” as mentioned above means metals sale prices are set on day of shipment.  The customer bears the risk of metal price changes.
  2. Firm price basis” means metal sale price is fixed on the order date.  The mill bears the risk of pricing changes in metal from order date until ship date.  Some mills use financial hedges to limit risk.
  3. Toll Basis” means that the customer is responsible for metals procurement, making the raw materials available to the mill for processing.

Fairness of ‘Price Date of Shipment’ to Supplier and Consumer

Mac Metals will continue to price date of shipment.  As a small specialty brass mill, Mac Metals has neither the resources or expertise to initiate the financial hedges, or purchase the derivative contracts to achieve this means.  Tolling is not considered a viable option for our customers as our casting operations are limited to special forms of scrap and supplemented by off-site refining.

For more information on the custom extrusions provided by Mac Metals, please view our products and services tab on MacMetals.com.