Coil mills and big buyers attending last week’s Euroblech trade fair in Stuttgart exchanged first positions in the upcoming negotiations for annual supply contracts, mainly for the automotive industry. Some buyers said they would not mind if mills were bolder with their proposals.
Talking to Kallanish, a couple of mills stated they are asking for at least €100/tonne ($116) more in comparison to last year’s agreements, “in order to be able to keep operating”, as one manager put it.
Among buyers, the impressions were more diverse, ranging from hikes of €60 to €100, although buyers find that the higher end will be unrealistic.
However, buyers might not be happy with a shallow year-on-year increase either, telling Kallanish that minimal increases are harder to hand down to customers. These are often the carmakers, which are bigger and more powerful in negotiations.
“If we, for example, have a y-on-y increase of only €10-20, the carmakers will just ignore it, and insist to continue their previous contracts with us,” a buyer of a tier one supplier said. “With a €50 hike, we would have a decent basis for new deals with the OEMs.”
Using a popular figure of speech, he compared the situation of the automotive suppliers to “the sausage in the sandwich – we taste good, but we have no influence over the pressure from above and below”.
This is why he would prefer mills to impose their will over pricing more strongly, which they are not doing. “I am missing an attitude of ‘we must, and we will’; there are too many subjunctives and maybes,” he pointed out.
He hopes that positions will firm for the upcoming substantial negotiations in two to three weeks’ time.
Christian Koehl Germany
