As reported in AMM, some distributors expect the surcharges to drop again next month.

“I have factored in an 8- to 9-cent decrease in (Type) 304,” a second midwestern distributor said, noting that he expects base prices to remain stable, possibly through this summer.

Most of the surcharge drop in July will be caused by collapsing ferrochrome prices, distributors said.

Ferrochrome is predicted to settle at $1.15 per pound for the third quarter, according to AMM sister publication Metal Bulletin’s European benchmark indicator, last updated June 9. That would be down 25.3 percent from $1.54 per pound in the second quarter and 30.3 percent lower than $1.65 in the first quarter.

Falling nickel prices also are expected to drag down stainless surcharges next month. As of June 9, the London Metal Exchange’s cash nickel contract has averaged $8,806 per tonne ($3.99 per pound) this month, down 3.8 percent from $9,154 per tonne ($4.15 per pound) in May.

In addition, stainless scrap tags are expected to continue to fall, as order demand at steel mills dropped off in June and likely will be even worse in July, sources said.