Negotiations for annual coil supply contracts between steel mills and carmakers have been largely concluded in France but continue in Germany.
According to a manager of an automotive supplier, last week saw movement in the French negotiations, with slightly higher prices achieved than in the previous round one year ago.
There has been a standoff for weeks, mainly because of an “unbelievable spread” between the price ideas on the opposing sides, “but suddenly things happened quite quickly”, he tells Kallanish. While mills tried to achieve a year-on-year premium of €100/t ($117), carmakers were actually asking for a y-on-y reduction by €100, he says.
The compromise found now results in a €15-20/t y-o-y increase in favour of mills, which they will nevertheless not be very happy about. Earlier in the autumn, mill managers indicated “a three-digit increase” as their target to be able to break even. They did not comment on last week’s outcome.
The French results will very likely not be repeated in the German talks, which are dragging on. According to a German observer, the French deals were based on a higher price level that was achieved last year, owing to the obvious dominance of one major mill group in the country.
In Germany, the power is distributed more diversely. Players here do not expect deals to be concluded before year-end and many believe that the point of agreement will be a y-o-y increase in the mid-double digit euro range.
One German buyer finds that such an outcome would be most comparable with that in France. “If prices were, say, €20-30 higher than here, and that level was lifted by another €20 now, it sort of compares with around €50 achieved in one step,” he says.
