As coil prices rise ever higher above justifiable levels, buyers along the value chain should stand together to prepare for all scenarios, a German steel consultant advises.
“In order to secure steel volumes, I need to pay extreme amounts of money but cannot know if I can keep passing down the high prices further on,” says Andreas Schneider of Stahlmarkt Consult. “It is therefore crucial that I involve my customers in my calculations early on.” On the difficulty of obtaining steel, he observes that “several months ago you contacted five suppliers for a query, and now you need twenty”.
A manager at a German cold-roller calls the current pricing outright “fictitious”. “Prices are quoted but you cannot place orders for them for a certain date; they are a theoretic value that’s being pushed up,” he tells Kallanish. The latest such price calls reported from the leading EU mill bring prices for hot rolled coil up to €980/tonne ($1,165), and for cold-rolled and galvanized coil to over €1,100/t.
“The pricing mechanism is very strange nowadays,” he finds. “We take the spot price as an indicator for half-year negotiations, but they don’t help much, fictitious as they are.” For urgent orders to fill production gaps, buyers may pay twice that in individual cases, he observes.
He expresses some understanding for mills’ ambition to catch what they can. “After all, they have come out of a deeply red year,” he comments. “Maybe they kept output deliberately low after demand came back, to drive up the price. But now it has developed a self-driven momentum they don’t control anymore.”
Christian Koehl Germany