EU coil business sees ‘change of parameters’

Northwest European mills have in recent months successively increased price targets for spot deals, while simultaneously making very little volume available. Meanwhile, buyers are often deferred to next year, without a tangible proposal for volume, time or price.

In most cases, mills are not taking orders for delivery months down the line because of the unclear development of prices. According to a buyer of considerable volumes, this behaviour, especially by the market leader mill, is a novelty, and it is unusual. In the past, it was common to secure volumes for relatively faraway time slots without a price tagged to them.

“What’s really new and important to know is that we are seeing a change of parameters here,” he tells Kallanish. “For decades, you placed orders for a volume at a given date, and agreed on negotiating on the price at a time when rolling and delivery drew near,” he says of the customary way of doing business.

This habit seems to be defunct in times of unprecedented price fluctuations and supply shortages. Using a recent example, he says: “I receive [quarterly] contracts for cold rolled coil for €800/tonne [$947] ex-works these days. The spot price given by mills now is at €1,300. So, those are the two positions when we sit down in, say, November to come to a deal. Both figures are likely unreal by then. But we do strike a deal at, say, €1,150. That’s how it has worked for ages.”

He points out he rejected the no-deal-without-price approach pushed by the mill, threatening to cut ties. “Eventually, I could place an order for January/February 2022, and they have accepted,” he concludes.

Christian Koehl Germany