First long-term coil contracts struck in Europe
The traditional negotiations between big coil buyers and northwestern European mills have been rather subdued this year, but the first results have been obtained by Kallanish.
“Normally, the coil trade fair is the starting point of negotiations but, this time, the mills did not even give an offer,” says one participant who attended October’s Euroblech trade show in Hanover.
Some bids had already come in from buyers then, who were asking for a hefty €200/tonne ($212) reduction in comparison to the agreements struck one year ago. Against that, mills were later heard asking for a rollover, but that attempt has floundered. “Mills are not trying for that any more, certainly not in unison,” one well-connected observer says. “And for mills, a minus of €200 would break their necks,” another notes.
The slow motion of the talks this year became clear at thyssenkrupp’s annual results conference in November. A big share of the steelmaker’s output goes to carmakers and industries on long-term contracts. “They [the contract talks] are still outstanding,” a thyssenkrupp executive said during the 19 November conference. He made reference to “the beginning of the year”, suggesting deals would only be agreed in early 2025.
According to one observer, mills are currently gunning for a year-on-year reduction of €80/t and buyers for a €120/t cut. “ I think this might still drag for on a while,” he says.
One buyer concurs and says he only knew of one deal by hearsay. “Rumour has it that [one mill] signed for minus €90”, apparently with a player in the automotive industry. “That would not be too bad for mills, as long as the figure is not three digits,” he finds.
Another buyer claims his company has achieved exactly that in more than one deal signed, with a y-o-y reduction of €130 on average. The firm only agrees half-year contracts. Buyers that prefer full-year contracts might therefore have to make do with a lesser reduction.
Christian Koehl Germany
