Success Story

The Challenge

Any company involved in the buying or selling of ferrous scrap knows that it lacks transparency and price visibility. Ask 10 different companies, and they’ll give you 10 different prices of what they feel is the current market for a given commodity.
The price discovery process is archaic and incredibly challenging, given the volatility that exists in the scrap markets today. For information, most companies turn to industry publications, yet these are often unreliable, given their survey-based approach to collecting pricing information.
These companies need accurate and timely price information, based on actual order transactions, not guesses.
A nationally recognized steel producer wanted to achieve some objectivity in the process, get more accurate starting prices and obtain the information needed to be competitive.
It found the answer it wanted with MSA.

The Solution

MSA’s Metals and Advanced Manufacturing Division recommended that the company take advantage of our Raw Material Data Aggregation Service™, RMDAS™.

RMDAS offers this major steel producer several benefits

  • Improves the company’s buying performance to lower the cost of goods sold in an extremely competitive environment
  • Provides access to accurate price and volume data to help determine what prices to offer or accept for a particular commodity from a supplier
  • Establishes a more accurate starting price for each grade of ferrous scrap that it buys, giving a reasonable place to start negotiations
  • Shows weighted average price and volume data in other geographic and product groupings, regional availability and competitive market forces
  • Represents over 65% of ferrous scrap purchased by steel mills in the U.S. in geographic regions
  • Forms the basis of long-term pricing arrangements
  • Provides quick and meaningful comparative online graphs to benchmark the company’s performance using the powerful online reporting system
  • Offers a ‘score card’ to determine how the company’s prices compare with other regions and product groupings
  • Provides access to participants to weekly price data for the RMDAS index commodities
  • Offers Flash Reports that show regional price and volume trends
  • Acts as a reasonable modeling tool for SOx compliance
  • Shows prices and availability of alternative grades for mix changes that may reduce costs
  • Allows the company to track each of its locations against regions, product groupings and individual commodities

The Results

Our client has found RMDAS to be a useful tool in its ongoing effort to improve its buying performance and reduce its raw material costs in an extremely competitive environment.
By providing transaction-based data, rather than survey-based data, our solution brings the objectivity this company desired. Over the years, our client has found that the aggregated data reported in RMDAS is accurate and statistically relevant.
Today, this steel producer has the data it needs to better analyze its buying strategies and activities. It has more insight on the competition. It has improved its purchase planning, and can recognize opportunities to buy better.
RMDAS helps the company identify potential trends, adjust its strategy on a monthly basis, and enjoy real cost savings by finding opportunities to introduce other commodities into the melt process, identifying opportunities to supplement or alter its charge mix to reduce costs.

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