Steel's declined >30% over the last year. Have you been capturing the resulting savings?
The decline in steel should have caused significant cost reductions in many of the items refiners buy, but suppliers may not pass along those savings. To capture savings, refiners need to use market data to understand suppliers' input costs and proactively negotiate cost reductions.
In today's post, we provide a starter packet to negotiating some of the top steel-based savings opportunities for refiners. For each category, we show:
- A cost model that illustrates the breakdown of constituent input costs, including commodities, services, margin, and overhead
- A "should-cost" diagram that shows how the combined impact of all those input costs should have made the item's costs move over time
1. Carbon Steel Pipe
2. Structural Steel
3. Heat Exchangers
4. Tanks and Vessels
5. Pipe Fittings
6. Rotating Equipment