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S.Europe white goods contracts agreed below H1 2011 levels - 6 December 2011

Almost 60% of white goods producers in southern Europe have closed their contracts while the rest are still negotiating but very close to signing them, market sources tell Steel Business Briefing.

Several large white goods producers have agreed six-month contracts at prices below Q1 2011 levels, agreeing to pay between €555-570/t ex-works base price for CRC. “We are talking with mills from northern as well as southern Europe. The lower range is mainly coming from Southern European mills, but the main driver is the volumes, with large volumes it is easier to obtain better prices”, a purchasing manager of a white good company says to SBB.

In H1 this year white goods producers paid around €570-580/tonne ex-works for CRC, SBB hears. At the moment, CRC is available at around €530-550/t ex-works on the spot market.

“The fundamentals are getting worse and the forecast for our sector is for consumption to decline. With spot prices [at relatively low levels], steelmakers cannot ask for high prices,” another purchasing manager says. “The steel sector is suffering so we have more room for negotiations.” “It is easier to buy than sell steel at the moment,” a trader says.

Some end-users have agreed annual contracts using a 6+6 month formula, which allows prices to be re-negotiated/adjusted after the first six months. “We agreed an annual contract with a re-negotiation clause capping movements at €30/t [in H2],” a large international white good producer says.

 

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