EU coil market prepares for contract talks

The mid-year negotiations for long-term supply contracts between northwestern European coil mills and big consumers will start soon, and in some cases already have.

“There will be a long line of meetings next week for the initial talks for contracts for the second half of the year,” a buyer at a cold-roller tells Kallanish.

Other sources previously indicated that buyers would prefer to push back the talks as long as possible, assuming the sustained lull in demand will see steel prices soften further. “But they may be proven wrong after last week’s extension of safeguard measures by the EU,” which may strengthen the position of mills and possibly encourage higher price offers, one observer says.

A Dutch manager concurs that “it will be of strategic importance to mills that steel prices remain at least stable, preferably with a slight upward trend.” According to the cold-roller’s buyer, the first signals from mills have varied for a premium of between €20 and €50 ($22-54) over deals in the previous half-year. This is hard to translate to a market price per tonne figure, given the many variables that go with it.

Apart from the obvious range of prices achieved in different mill-consumer deals, time is a big factor. Just before the previous talks began, towards the end of 2023, coil prices had just taken a run-up towards a surge that would last well into January. The low point of the spot market for hot rolled coil back then was at around where it is now, at €620/tonne, before rising to €750/t in mid-January.

Annual or half-year contracts normally see €100 added on top of the spot price, so in most cases would have risen above €800/t during the last round, the longer talks dragged on.

That surge momentum is nowhere to be seen now, and even if mills can lift spot prices in June, the increase will hardly be as massive as in December. They may therefore be lucky if they can repeat the prices of the last round. According to the buyer, “the offers from mills reflect their need to cover costs, but not the demand on the market.”

Christian Koehl Germany