{"id":8038,"date":"2026-10-19T02:14:00","date_gmt":"2026-10-19T02:14:00","guid":{"rendered":"https:\/\/chinametalfoundry.com\/?p=8038"},"modified":"2026-10-19T02:14:00","modified_gmt":"2026-10-19T02:14:00","slug":"casting-price-adjustment","status":"publish","type":"post","link":"https:\/\/chinametalfoundry.com\/ru\/blog\/casting-price-adjustment\/","title":{"rendered":"Casting Price Adjustment: How Index, Currency and Volume Clauses Really Work"},"content":{"rendered":"
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A casting quotation is a snapshot, not a promise. Pig iron, scrap, aluminum ingot and electricity all move week to week, so the number you negotiated in March can be uneconomic by September. A well-drafted casting price adjustment<\/strong> clause is how buyers and foundries share that risk instead of fighting about it a year later.<\/p>\n<\/div>\n

This guide breaks a casting price adjustment clause into its working parts: the cost structure that decides how much of a casting price is actually exposed, the index formula used to pass metal cost moves through, currency sharing, surcharges, and the reprice triggers you should write into your RFQ or purchase order. Every example uses the same 18 kg ductile iron housing so the math stays checkable. Background on quoting itself is in our casting RFQ checklist<\/a>, and cost drivers are covered in what drives casting cost<\/a>. Index references follow the London Metal Exchange<\/a> \u0438 AFS<\/a> price reporting practice.<\/p>\n

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A price clause, the metal it tracks, and the parts it protects \u2014 the three things every contract should line up.<\/figcaption><\/figure>\n

Why a Casting Quotation Only Holds for 30 to 90 Days<\/h2>\n

Open any foundry quotation and look for the validity line. Most say 30 days; some say 60 or 90 for stable alloys. That window is not bureaucracy \u2014 it is the foundry protecting itself against input markets it does not control. Grey and ductile iron charge materials swing with the ferrous scrap cycle, aluminum follows the LME plus regional premium, and foundry electricity tariffs are renegotiated annually in most exporting countries. When a buyer asks for a 12-month fixed price, the foundry does one of two things: refuses, or quietly adds a risk premium to every piece.<\/p>\n

A casting price adjustment<\/strong> clause is the third option. Instead of fixing the price or repricing by argument, both sides agree in advance on a formula: which index is tracked, how much of the move passes through, and how often the price resets. The foundry gets to quote at today’s input cost without padding; the buyer pays the market, not a forecast premium. The same logic applies when you are comparing processes \u2014 our casting lead time<\/a> guide shows how capacity and scheduling clauses work alongside price clauses in the same PO.<\/p>\n

Where Casting Price Adjustment Comes From: The Cost Structure of a Part<\/h2>\n

How much a casting price adjustment needs to move depends on what share of the price is actually exposed to a market index. Take our reference part: an 18 kg ductile iron pump housing poured at 62% yield. The pour weight is 18 \u00f7 0.62 = 29.0 kg. A typical charge is 40% pig iron, 45% steel scrap and 15% internal returns. At USD 580\/t pig iron, USD 330\/t scrap and a 0.20\/kg internal credit for returns, the charge mix costs about 0.41\/kg, so roughly USD 11.90 of metal goes into every pour \u2014 before melting energy, labor, consumables and margin.<\/p>\n

That is why material share, not list price, drives casting price adjustment clause design. The table below shows typical shares from shop-floor records across the processes we run at \u043b\u0438\u0442\u044c\u0435 \u0432 \u043f\u0435\u0441\u0447\u0430\u043d\u044b\u0435 \u0444\u043e\u0440\u043c\u044b<\/a>, \u043b\u0438\u0442\u044c\u0435 \u043f\u043e\u0434 \u0434\u0430\u0432\u043b\u0435\u043d\u0438\u0435\u043c<\/a> \u0438 \u043b\u0438\u0442\u044c\u0435 \u043f\u043e \u0432\u044b\u043f\u043b\u0430\u0432\u043b\u044f\u0435\u043c\u044b\u043c \u043c\u043e\u0434\u0435\u043b\u044f\u043c<\/a>.<\/p>\n\n\n\n\n\n\n\n
Process (typical part)<\/th>\nMetal + melt consumables<\/th>\nEnergy (melt + heat treat)<\/th>\nLabor + tooling + overhead<\/th>\n<\/tr>\n<\/thead>\n
Sand cast iron (18 kg housing)<\/td>\n40\u201350%<\/td>\n6\u201310%<\/td>\n45\u201350%<\/td>\n<\/tr>\n
HPDC aluminum (4.6 kg housing)<\/td>\n35\u201345%<\/td>\n5\u20138%<\/td>\n50\u201355%<\/td>\n<\/tr>\n
Investment cast stainless (2.8 kg valve body)<\/td>\n30\u201340%<\/td>\n4\u20136%<\/td>\n55\u201365%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Two practical readings. First, the higher the metal share, the more the clause matters \u2014 an iron sand casting needs index language more than a labor-intensive investment casting does. Second, energy deserves its own line: induction melting for grey and ductile iron draws roughly 560\u2013620 kWh per tonne of liquid metal, which at USD 0.085\/kWh is USD 48\u201353 per tonne, or about USD 1.40\u20131.55 on our 29 kg pour. A tariff reset can move that line by more than a scrap index wiggle, and it should not be hidden inside the metal formula.<\/p>\n

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Charge materials and melting energy set the index-exposed half of the price.<\/figcaption><\/figure>\n

The Material Index Clause: Formula, Band and Pass-Through<\/h2>\n

The core of most casting price adjustment language is one line of arithmetic:<\/p>\n

\u0394P = k \u00d7 m \u00d7 (It<\/sub> \u2212 I0<\/sub>) \/ I0<\/sub><\/strong><\/p>\n

where m is the material share of the base price, k is the pass-through coefficient (how much of the raw move the buyer absorbs), I0<\/sub> is the index value in the base month written into the PO, and It<\/sub> is the same index at the reset date. Say our housing is quoted at USD 24.50 with a 45% material share and 80% pass-through. If the composite charge index rises 18%, the adjusted price is 24.50 \u00d7 (1 + 0.80 \u00d7 0.45 \u00d7 0.18) = USD 26.09<\/strong> \u2014 a 6.48% move on the invoice, not 18%, because labor and overhead never left their lane.<\/p>\n

Most casting price adjustment clauses add a trigger band<\/strong>: nothing happens while the index stays inside, typically, \u00b15% of base. Outside the band, the adjustment applies only to the excess. With the same numbers and the index up 12%, only 7 points count: 24.50 \u00d7 (1 + 0.80 \u00d7 0.45 \u00d7 0.07) = USD 25.12<\/strong>. The band kills the administrative noise of small moves \u2014 nobody wants a PO amendment for a 2% scrap wiggle \u2014 and both sides keep most of the benefit when markets behave. Which index gets named matters just as much: composite ferrous scrap and pig iron assessments from Fastmarkets<\/a> for iron, LME aluminum plus regional premium for HPDC, and the alloy surcharge schedules most stainless mills publish monthly. Our \u0441\u0435\u0440\u044b\u0439 \u0447\u0443\u0433\u0443\u043d \u0438 \u0432\u044b\u0441\u043e\u043a\u043e\u043f\u0440\u043e\u0447\u043d\u044b\u0439 \u0447\u0443\u0433\u0443\u043d<\/a> \u0438 aluminum casting alloys<\/a> comparisons show how differently those families move.<\/p>\n

Currency Sharing in a Casting Price Adjustment Clause<\/h2>\n

For offshore sourcing, FX is half the exposure. A supplier invoicing in USD still pays wages, local electricity, sand and resin in its home currency. Split the cost base: call 55% USD-linked (metal, freight, imported consumables) and 45% local. If the local currency strengthens 4% against the dollar, the supplier’s USD revenue buys 4% less local cost coverage on that 45% slice, so the neutral adjustment is 0.45 \u00d7 4% = 1.8%<\/strong> upward. Writing this as a two-way sharing formula \u2014 with the same band and cap mechanics as the material clause \u2014 prevents the alternative, which is the foundry quietly loading a currency cushion into the initial quote or re-quoting at the worst moment for you.<\/p>\n

Keep the mechanics symmetrical. A clause that adjusts upward when the supplier’s currency strengthens but stays silent when it weakens is not risk sharing; it is a one-way option. Good casting price adjustment language names the FX pair, the reference rate source, the measurement window and the share split \u2014 and applies the same arithmetic in both directions.<\/p>\n

Energy, Alloy and Freight Surcharges<\/h2>\n

Not every input belongs in the main formula. Casting price adjustment practice splits the volatile inputs into separate lines:<\/p>\n