Stress, indecision, anxiety…that’s 2017 ferroalloy negotiations. While many of the RFQs have been issued, little business has actually been concluded. For the sellers, its more than just fixed or formula. In the sellers agree to fixed, are they selling themselves out too cheaply? Will they actually be able to get the material to fulfill the contracts, especially in manganese where alloy prices have yet to price in soaring ore prices. Formulas are even worse. Will the indexes actually reflect market prices? What will be the lag going up and down? Can discounts be reduced, or even eliminated? What happens if a competitor decides to keep the huge discounts? Will more production come on stream with higher prices and if the market collapses, will the surplus be dumped into the spot market?
It’s all the same thing for the buyers, but they have to worry about their steel consumers, i.e., construction and autos? Has the market gotten way ahead of a “real” recovery? How will China react? What going to happen with the US dollar and overseas trade? Should buying be annual, quarterly, monthly or even spot? A combination of fixed and formula? A new hybrid?
This is time for everyone to earn their big bucks.
PS, quote in the headline came from Albert Einstein.