In the wake of the relatively sudden acceleration in negotiations for long-term coil contracts in northwest Europe in mid-December, many steel users will be entering the new year with volumes secured at acceptable prices. Contracts that are still in the forging phase are likely to end at higher values going forward.
“Until early December still, I was positive that signatures will take until January,” says one market player, in accordance with many others that had taken a wait-and-see attitude. In the two weeks before Christmas, the attitude had widely changed, talks accelerated, and many industrial buyers and OEMs have now reported finalised deals for 2023.
The yardstick for negotiations was the roughly €1,000/tonne ($1,066) achieved one year ago for hot rolled coil throughout 2022 – a figure easy to remember. Many players entered and ended the talks with a year-on-year reduction of €200. One seasoned buyer tells Kallanish his company even undercut the mark of €800 for HRC still in around mid-December. But he will be one of few, as offer prices kept surging, and are expected to keep doing so.
A clear word has been heard from a northern mill that offered a y-on-y reduction of only €180, which it says will shrink to €150 y-on-y as January starts. For any deals taking longer, figures are not yet available.
“Those who did not sign in December will have a hard time in January getting the prices we did,” one buyer says, summarising the mood. “We have signed with four of the five mills we do business with, so we have secured 50% of our volumes,” says the buyer of a supplier company. One mill was not yet willing to conclude a deal, but after four successful deals the buyer sports confidence that the fifth will not take long. “They need our volumes,” he is sure.
Christian Koehl Germany