Jul 07, 2023
EU half-year coil contract talks continue
2023-07-11
Now that the second half-year has commenced, European negotiations for long-term supply contracts valid until December remain ongoing between a number of buy- and sell-side participants.
One major regional mill tells Kallanish it concluded a number of negotiations last week, and this week expects to conclude the remainder. Other observers are not so sure that the game will be over that soon. “We have not signed yet, as we are waiting for the big buyers to go ahead and set the price, but to my knowledge this has not happened yet,” one German manager says.
In fact, none of the buyer companies contacted have concluded a deal. “At the moment, the negotiations are suspended, given that even our customers are not clear about the market,” a buyer at a processor says. “I, myself, do not have a clear idea about prices. He is however positive that prices will not be above those of the first half-year, despite mills’ initial attempts to the contrary.
One mill source basically concurs. “Generally, we have landed at rollovers, with some minor increases” in contracts that were signed “at the low end” half a year ago. Back then, the negotiation period was shaken by a massive and largely unexpected surge in spot prices. While December began with HRC hardly at €650/tonne ($704), prices surged to €750 over the course of January and then continued their way upwards.
This time, the direction is opposed, and the current price cycle is not at its beginning but nearing its end. Coincidentally, the apparent price floor is equal to that seen seven months ago, at around €650/t.
Long-term contracts traditionally include a premium of at least €100/t over the temporary spot price.
Christian Koehl Germany
Source: Eurometal
