News
13/10/26
US steel contract talks favor sellers for 2027
US steel contract talks favor sellers for 2027
Pittsburgh, 13 October (Argus) — US flat-rolled steel mills are using the
exceedingly constrained supply environment the industry faces as leverage to
shape 2027 contract negotiations on more favorable terms. Mills are looking to
optimize contract portfolios for next year by reducing discounts on index-linked
deals, capturing full product extras and reducing exposure to customers that
struggle to meet obligations or do so inconsistently. During a recent webinar
hosted by Argus , attendee responses to survey questions highlighted the more
restrictive, higher-priced environment heading into 2027. The survey found that
56pc of respondents anticipated having less contractual volume next year than in
2026. The bulk of respondents, 85pc, said they expect discounts on index-linked
deals to be 4pc or lower, with a little over half of them looking for discounts
of 3-4pc and a third of respondents expecting 1-2pc. Among the limited number of
respondents expecting index-linked contract discounts above 4pc, most capped
their expectations at 5pc. This represents a noticeable reduction in discounts
associated with index-linked deals compared with historical levels. Mills have
historically offered discounts ranging from 6-10pc and, in some cases, even
higher. The discount level is often partially contingent on the monthly tonnage
and product mix of the contract. However, the discount level on a
dollar-per-short ton (st) basis has continued to widen over the past 12 months
as the US market has witnessed steel prices rise to the third-highest level in
Argus' history. Tariffs blocking out previously competitive imports and robust
domestic demand, mostly from data centers and the energy market, have driven the
sustained price appreciation. The high-price environment is not expected to
waver, according to survey respondents. The survey also found that more than
85pc of respondents expected US hot-rolled coil (HRC) prices would be at or
above $1,200/st by January 2027. Within this segment, more than half of
respondents, 53pc, expected prices to be $1,201-$1,300/st, while 32pc believed
prices would be above $1,300/st at the start of next year. The survey results
were collected at the beginning of October, when the US Argus Steel Index HRC
price was $1,261.75/st. Price indications from buyers in the following days put
prices above that level and encroaching on $1,300/st in some cases. Still,
market participants anticipate that the supply situation could begin to loosen
in late first-quarter or second-quarter 2027 and are eyeing this period for a
potential price correction that could bring more balance to the
supply-and-demand landscape. By Aaron May 2027 US flat steel contract
expectations Expected index-linked contract discount Share of respondents 1-2pc
discount against contract 33pc 3-4pc dicsount against contract 52pc 4-5pc
discount against contract 9pc Over 5pc discount against contract 6pc Expected
HRC price by January 2027 Below $1,100/st 6pc $1,100-$1,200/st 9pc
$1,201-$1,300/st 53pc Above $1,300/st 32pc Data compiled from webinar survey
participants Argus US Flat-Rolled Contract Negotiations Webinar Send comments
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