Steel Mills
October 13, 2013
A Contract Pendulum Swing Could Impact Mill Order Books
Written by John Packard
The following is an email we received from a service center executive regarding the current contract negotiations and their opinion as to how changes can change the mix of contracts to spot orders on with a mill and, price volatility in the marketplace. We have heard the same argument from others within the steel industry who believe the changes being requested by the domestic steel mills will create more volatility in the spot markets.
The pendulum has moved back and forth over the years, with the mills sometimes having majority contracts/lower spot books to sometimes having majority spot books/lower contracts. While the mills may be convinced (wrongly I believe) that the Index based pricing has been detrimental to their bottom lines, there likely were many benefits that came about as a result of the index model:
