European coil mills are confident that time is on their side during negotiations for annual supply contracts with OEMs and other large buyer companies this autumn.
A customary starting point for price discovery are the German autumn sheet trade fairs Euroblech and Blechexpo. At this year’s Euroblech in in Hanover, taking place this week, some players have started their talks. Others dismiss the fair as too early in time, especially as several mills have declined to participate this year.
Those who obtained an early impression heard offers for contracts at roughly €100/tonne ($111) above current spot prices. This would mean €840-860/t for hot-rolled coil, and €940-960/t for hot-dip galvanized coil, mill and buyer sources confirm to Kallanish.
One mill manager cautions that extended rounds of talks will likely be accompanied by a trend of rising prices powered by a “QCC” factor, as he calls it. With this, he refers to the influence of import quotas, the Carbon Border Adjustment Mechanism (CBAM), and rising costs for production.
Such a gap between tabled offers and spot prices is not unusual, given that the long-term contracts warrant stable supply and quality over the term. However, one buyer of a re-roller’s manager finds that “a gap of €100 between spot and contract is clearly too big in the current market situation”.
He argues that quotas and CBAM influence the spot market, but not necessarily long-term contracts, which are the mainstay of European mills and their European customers who value a domestic supply base.
Still, the mill manager touches a painful point when looking three years back. Between October 2023 and February 2024, spot prices surged by more than €120, and the happiest buyers were those who had struck their deals by December.
