Negotiations over annual coil supply contracts between mills and large customers in 2023 in north-western Europe appear to have gained momentum prior to the Christmas break.

Little noise has been made on that front so far. In late November still, an executive of a large German steelmaker said that talks were scheduled for January. This was fairly in line with the mood at the Euroblech sheet fair in late October, which was more reserved than in pre-Covid years. Most representatives there stated it was much too early to think about annual talks.

Such statements were little surprising given the continuing downward movement of spot market prices, and reservation of buyers who were unwilling to replenish inventories in an environment of low demand.

Meanwhile, a well-connected observer of Germany’s steel using industries tells Kallanish that negotiations are already in full swing, and could be inked in early January. This acceleration could be an echo of the changing sentiment on the spot market, that prices have reached bottom, and that signs are showing up now.

The other main indicator is the price of previous settlements, which for hot rolled coil was around €1,000/tonne ($1,062) in January, reflecting a natural premium of contracts over spot prices, which then stood at €900+. In October, mills indicated that they sought to maintain the prices of contracts signed in mid-year. By July, spot prices were trending towards, and effectively below, €850.

According to a Dutch buyer, the figure of “at least” €850 was last heard from the mills’ side for 2023 contracts, while, earlier, a figure of €800 was reported. “Contract offer prices are rising, and several steelmakers have meanwhile released their bids for the automotive sector with fixed prices for the next six months,” he says. This shows that mills are encouraged now, and that buyers need to surface to secure a price before values move up.