Some European flat steel producers have proposed a €100/t increase in first half 2027 automotive supply contract negotiations, market participants told Argus over the past week.
A EU mill had offered at €860/t for hot-rolled coils (HRC) and €960/t for hot-dipped galvanised (HDG) to some original equipment manufacturers (OEMs). Negotiations are ongoing, and will progress this week during an industry event in Germany.
"Material will be missing from the market, but we have to see what demand will be like," one steel mill source said in reference to the negotiations, adding that the mill intends to offer three-digit price increases for next year too.
"It is possible that a double digit increase close to €70/t may be accepted by buyers when compared to last year's negotiations," one tier 1 automotive supplier said, adding that "Mills have been slowly but surely scaling up production so they will feel some pressure to sell".
The proposed hikes are on the back of spot market prices moving this year as a result of trade restrictions. The Argus Northwest EU HRC index has increased from €626/t ex-works on 2 January to €739.50/t on 16 October – an increase of over 18pc since the start of the year. Prices have gradually moved up throughout the year, dipping slightly at the end of the second quarter, while buyers were receiving material for stockpiling before 1 July when more restrictive import quotas entered into effect.
The quotas have successfully slashed imports – in July-August HRC imports amounted to just under 800,000t, or 400,000t average per month. The monthly average in January-June stood at close to 780,000t, with second quarter arrivals April-June peaking at a total of 2.75mn t.
While the EU has tightened import steel quotas this year, it has continued working on measures for downstream steel-consuming sectors on calls from associations and stakeholders. Last week news emerged that the EU is preparing a four-year safeguard regulation for an annual quota on Chinese hybrid and plug-in hybrid vehicles of 350,000t/year.
The wider EU automotive industry has continued to push for changes to the EU's industrial and automotive proposals, with Germany's automotive association VDA saying a recent German-French deal is a positive step but still falls short on measures needed to support competitiveness and investment, including provisions on green materials and renewable fuels. Steel association WV Stahl has been more critical, calling for more moderate emissions rules and arguing that the proposed changes would weaken incentives to purchase green steel.
