NEW YORK Contract negotiations for 2014 are moving slower than expected as buyers wait to decide how much discipline mills will have in moving away from index-minus pricing, steelmakers and buyers said.
"Were seeing all the big boys sitting on the sidelines right now inundated with quotes, but theyre not doing anything," one Midwest service center source said. "Everyone is scrambling to see who will take care of them and find the best deal possible. People are still wondering if this is all going to happen."
U.S. steelmakers are said to have largely remained disciplined in attempts to move away from discounting (amm.com, Oct. 23), although many service centers and end-market consumers, especially larger players, remain uncertain and unwilling to believe that they wont be exempt from the pack.
"I dont know what the mills are expecting. Theyre the ones who were offering 5-, 6-, 7-percent discounts, and suddenly turning around and saying were not doing it anymore, " a second Midwest service center source said. "Im assuming things will move slower."
Traditionally, the bulk of heavy negotiations are expected in the mid-November to year-end range, although the pace of contract discussions was underscored last week during Nucor Corp.s third-quarter earnings call (amm.com, Oct. 17).
Market sources reported that other mills have remained vague in their contract discussions, offering unattractive firm pricing options at quarterly or six-month fixed numbers with no rebates or extra incentives.
Given this lack of competitive appeal, some buyers wondered whether moving to more spot business could be a better bet (amm.com, Oct. 23).
Others feared, though, that given slower discussions, mills might scramble to lock in certain tons and break from the ranks.
"The mills are offering me no discountsand why would I commit to that? No one is budging and theyre all sitting there and holding the line with this tough guy approach," a third Midwest service center source said. "But its like the game of chicken. At some point someone is going to break soon, and Im getting nervous that the mills will cave."