In the research section of Steel Market Update we cover a wide variety of flat rolled steel topics. One of which is in our Steel Buyers Basics section where we speak to the various billing methods for flat rolled steels. Today we will cover actual weight, theoretical minimum weight and theoretical nominal weight billing.

Steel Buyers Basics – Actual, Minimum & Nominal Weight

For the sake of understanding the majority of what I will discuss today has to do with the way service centers sell steel to their customers and not how mills and trading companies sell their products. I need to spend a moment talking about “weight”. Steel coming out of the domestic and foreign steel mills is sold by weight. In the flat rolled steel market the domestic mills (most, but not all) offer two ways of purchasing – actual scale weight (you pay for the weight you receive) and theoretical minimum weight (TMW) where you pay for the footage you receive and the weight is calculated based on that footage and the decimal ordered.

Service centers in the United States sell flat rolled steel in various ways – actual scale weight, theoretical nominal weight (sometimes called actual book weight), theoretical minimum weight, price per piece, price per square foot. Not all service centers offer each of these options but, most of the larger service centers offer multiple billing options for their customers. Each and every one of these billing methods is recognized in the steel community as being legitimate ways to sell steel. However, abuses can and do occur and that is the reason for this series of articles.

I want to concentrate on three billing methods today – actual scale weight, theoretical minimum weight (TMW) and theoretical nominal weight (TNW or Actual Book Weight).

1. Actual scale weight is where you pay for the weight you receive and to insure it is accurate the company receiving the product weighs the steel on a certified scale.

2. When steel is ordered based on a theoretical minimum weight (TMW) basis the customer pays for the decimal ordered (for example - .0356”) and the weight is calculated based on the linear footage times the width (equals the square footage) times the density factor for .0356” which I have calculated to be 1.453 pounds per square foot.

3. Theoretical Nominal Weight (TNW or Actual Book Weight) is based on the nominal decimal and the weight is calculated using the nominal steel density factor. Using the 20 gauge example above the nominal decimal is .0396 and the density factor is 1.656 pounds per square foot.

What really makes this interesting is when you actually compare the same coil using the three billing methods – what do you think you will get for the billing weight? More importantly how do you protect yourself from being over-charged?

We will cover this and more in future blog postings.

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