EU coil mills seek hike in long-term contracts

For long-term contracts for the upcoming second half of 2023, European coil producers are heard seeking big premiums, in comparison to both half a year ago and to current spot prices.

Several buyers tell Kallanish that mills are striving for €100/tonne ($107) on top of the contracts signed around the turn of the year. From December on, spot prices had been gaining momentum, reaching around €700/t for hot rolled coil at the end of last year. The higher level of contracts started at €800/t, maybe at slightly less for those who signed very early, and more for those who came later.

“Right, half a year ago, contracted prices were slightly above €800/t, and now they [mills] are asking for something nearing €900/t,” a manager at a processor company says. He calls the offer “irrationally bold”, noting that “we [mills and buyers] are worlds apart”. In his opinion, prices should actually be lower than those from December, “which would still be above the current spot prices”. These are currently softening towards the mark of €700/t.

The wording of another buyer is similarly sharp. “They [mills] have totally lost their sense of reality. At the moment, people would not even accept a €50 reduction if it was offered,” he says. He expresses some understanding for the mills’ sales staff, who need to spur optimism, and aim high in order to possibly end up with a much lower compromise.

Apparently, not many negotiations have led to signatures yet. “Neither side has an idea where the price should be,” the buyer notes. “We are still lacking some pilot agreements to lead the way. Everyone is remaining wary, watching the other one’s moves.”

Christian Koehl Germany