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
EU coil price recovery remains challenging: EuroBLECH 2024
The recovery of coil prices in northwestern Europe is showing only limited momentum, as industrial demand remains flat, as it has been for months, defying mills’ attempts to hike values.
At this week’s Euroblech fair in Hanover, Kallanish heard from buyers that ArcelorMittal “said it very clearly” that it is seeking €40/tonne ($44) higher transaction prices and intends to enforce this. This announcement has been making the rounds for three weeks already, with the market leader targeting a price of €590/t ($637) ex-works for hot rolled coil in Europe.
It is, however, still being undercut even by mill-owned service centres. One buyer spoke of a deal done one week ago, when he still bought hot-rolled sheet at a finished price which, deducting cutting and services, hints at a HRC price of slightly below €550/t.
However, he also said mills are now acting more strictly, and returning orders that were placed at the old offer prices. Whether they succeed remains to be seen. Another buyer from a big distributors said prices of €600/t and above for HRC have also been touted. “That’s where they [mills] are trying to bring prices to for deliveries in the first quarter of 2025; the fourth quarter is basically closed now, except for maybe some leftover tonnages,” he noted.
One Dutch buyer told of reports of an unofficial €70-80 hike attempt, which he finds unrealistic. He hoped that mill can at least assert an increase by €20, giving €575/t as a price he found realistic to expect by the end of this year.
As the distributor’s buyer words it, “there is some movement in prices. But none in demand.”
Christian Koehl Germany
Northwest European buyers doubt coil price hike move
Managers at large coil purchasing companies in Germany and Austria were taken by surprise on Wednesday by ArcelorMittal’s hot rolled coil price hike in Europe to €590/tonne ($652) ex-works.
“Only today, I received an effective-price offer from ArcelorMittal, but when I re-calculate it, it is certainly lower than that [€590],” one Austrian source told Kallanish on Wednesday. He could not give a comparable base price, as the offer concerned a special specification, but notes it would not be in line with the new price hike.
“The latest move, from last week to this, was down a bit further,” says one unawares German service centre manager, assessing the latest offer at slightly below €550/t ex-works.
Another manager doubts that mills’ production capacities for the fourth quarter are already filled enough to justify such a move. “There must be some other background to it,” he says, suggesting that mills might try to flex their muscles in advance of the upcoming Euroblech fair.
“And anyway, who would pay that [€590]?” the Austrian source wonders, in view of continued sluggish demand in Europe. His latest order from a western European mill last week was at €580/t delivered, which would translate to €530/t ex-works, close to the low point of the latest cycle heard by other sources.
One well-connected observer does however confirm he heard of the new offer, and that ArcelorMittal would not book any additional volumes at previous, lower prices. “It’s not official, really, because they have failed to exert it often enough in the past,” he says, but he notes that mills do have a point, as competition from Asia is waning somewhat.
Sources reported on Wednesday that ArcelorMittal is raising coil offers in Europe, with immediate effect (see separate story).
Christian Koehl Germany