304 is a proper austenitic (and therefore not magnetic) stainless steel, this'll be what decent exhausts are made from. Well, the straight bits anyway, if they have their own bender, the bends will probably be 304 too, if not, the bends will most likely be 316 ("Dairy Grade")
Ferrtic stainless are all the grades starting with 4XX. Just because it's ferritic, doesn't mean that it's "bad" quality, just not as "good" as a full austenitic one.
Get what you pay for though. 316 Mandrel Bends in 2.5" are around £5-10 each, and they're GOOD prices (well, so Saul tells me ;-) )
If it's magnetic around the welds, they've probably used the wrong filler (welding rods). Should be 308 on 304 (from memory)