This week will see most major German and other northwest European mill, distributors, and technology providers for coil and sheet gather at the Euroblech sheet fair in Hanover. The event alternates annually with Blechexpo in Stuttgart, and both fairs are usually the start of talks for long-term supply contracts for the coming year.
The basis orientation for price negotiations are normally the previous year’s deals, while current spot prices play an important, but lesser role. At Blechexpo 2021, mills triggered some irritation when all announced a €600/tonne ($592) hike on top of 2020 prices, “differing by maybe €5 here and there”, a German buyer recalls.
That resulted in prices virtually doubling compared to deals closed at too-low prices in 2020, prior to a major surge that caught everyone by surprise. Eventually, most deals last year settled at around €1,000/t for hot rolled coil, with cold rolled and galv correspondingly higher.
This time, players expect that contracts will be several hundred euros below last year’s, and buyers will be inclined to postpone providing their signatures, as long as spot market prices keep sinking.
A coordinated offer from mills like last year is unlikely, the German buyer tells Kallanish, but he believes that mills might come up with proposals for new price mechanisms. One such tool could be an energy price index, as is standard for aluminium, he suggests. “In any case, they will have a hard time arguing against the spot price trend,” he concludes.
Christian Koehl Germany
