Aluminium pricing has two personalities: metal and conversion. Blur them and every LME swing becomes a relationship crisis — or a silent margin leak that only shows up when someone finally opens the cost sheet.
Internally, keep the stack visible even if the customer sees one number. Know your metal or billet reference and how often it updates. Know conversion for press, labour, energy, and overhead. Know die amortisation and special process adders. Know finish, packing, freight, and the cost of credit. If sales cannot explain the parts, they cannot defend the whole.
Then choose a policy you can say out loud. Some plants revise periodically against an agreed index. Others keep short quote validity windows. A few use surcharges for extreme moves, sparingly and in writing. Sophisticated OEMs sometimes accept floating metal with a fixed conversion. The worst policy is improvisation: firm when metal falls, suddenly “flexible” when it rises. Customers learn that pattern faster than your team admits it exists.
Scrap and recovery belong in the math. Heroic yield assumptions make conversion prices into fiction. Either price with realistic recovery or improve yield before you discount conversion to win the PO. Soft metal logic on top of soft recovery is how busy plants lose money politely.
Discounting destroys value when you meet every competitor rate without knowing their mix or payment terms, when you give metal downside to the customer but eat the upside yourself, or when long credit and soft price land on the same account. Price is a system: metal, conversion, credit, and mix moving together.
Governance beats heroics. Set floors, approval rights, and a weekly view of quotes below corridor. Sales should know what they can say without calling the owner at midnight. Volatility will not stop; unmanaged discretion will keep hurting.
Pricing discipline is part of profit optimisation. Vulcan helps plants install that corridor thinking so metal movement shows up as a managed policy — not a quarterly surprise in the P&L.