Case Study

An Example in Historic View

Our alloy surcharge forecasts as an example of use


To show how reliable our forecasts are, we calculated a simple case study starting in 2009.

1

Scenario:

On each 1st of the month, you use our current alloy surcharge forecast for the upcoming month to decide whether to order your stainless steel supply one month in advance.

So if the forecast shows rising alloy surcharges, you can choose to order the supply in the current month. If not, you can order it in the next month.

For hollow steel 2 months in advance was calculated in addition. So, depending on the forecasts of the month after next, you decide whether to order your stainless steel supply two months in advance.

2

The requirements:

The next month's demand is approximately known and it can be ordered in advance.

Are there enough cash and warehouse capacity for the order?

Any interest is included in the calculation.

3

A historic analysis provides the following result:

The average yields in euros per ton, if calculated according to the aforementioned model (basis 1.4301) are:

The savings per t

Year
Flat Prod. (Germany)
Hot Rolled Bars (DEW)
Hollow Bars (MST)
Hollow Bars (MST)
2 months in advance
2009
32,07 €
20,51 €
83,76 €
170,47 €
2010
74,92 €
94,85 €
116,77 €
214,98 €€
2011
9,40 €
17,52 €
30,58 €
60,01 €
2012
15,05 €
23,80 €
23,15 €
34,55 €
2013
3,82 €
19,74 €
-9,69 €
-12,18 €
2014
28,67 €
29,97 €
34,92 €
78,56 €
2015
0,82 €
-2,17 €
-0,21 €
-0,55 €
2016
33,26 €
41,80 €
20,68 €
47,66 €
2017
39,62 €
71,29 €
37,58 €
69,49 €
2018
17,64 €
19,49 €
41,73 €
92,60 €
2019
41,57 €
42,65 €
64,37 €
131,02 €
Average:
26,98 €
34,49€
39,81 €
80,43 €

An interest rate of 5% is applied if the demand for the upcoming month is ordered in advance.

This means our clients would save an average of 27 EUR/ton up to 80 EUR/ton over this period, if they used our forecasts. On average, our trend forecasts are correct 11 months per year.

If you have space to decide on your purchase later than on the 1st of the preceding month, forecasting accuracy and yields are even higher. This would allow maximum yields of approx. 32 EUR/ton for flat products, 45 EUR/ton for hot rolled and 45 EUR/ton for hollow bars respectively 82 EUR/ton for hollow bars 2 months in advance.

Of course this case study cannot make guarantees for the future, but it illustrates how our forecasts can work for you.