The next question comes in from the line of Luke Nelson calling from JP Morgan.
Luke Nelson
A couple from me. Just on pricing. A couple of your peers have given a bit more granularity into 2022 in terms of margins, and I suppose, within that pricing and ASP expectations. So I was just wondering if you can maybe give a bit more color on how you’re seeing given your order book extends likely into next year? How you’re seeing potential progression of margins, say, into early next year? And I suppose within that, any comments you can also give around annual contract resets, particularly in Europe? That’s my first question.
Tim Di Maulo
Okay. So indeed, we are seeing Q1 as a strong one. Prices are following the 2 trends, the trend of the cost increase. So they are more than compensating the cost increase, and they could let’s say, moment of the market with demand, et cetera, with some better, let’s say, entering in the year because of the renewal of some contracts, et cetera. So, all this is positive. And we can confirm that all the deposit is there. I will not say that we can give more granularity. There is always, let’s say, sensitive information, but the outlook is definitively positive on Q1.
Luke Nelson
Is it possible to give a sense of what the annual contracts for the 1st of January would be?
Tim Di Maulo
No, I will not put this on disclosure.
Luke Nelson
Okay. No, that’s fine. Next question is just sort of a bit of a follow-up on Brazil more broadly. I’m sure we’ve seen the announcements around the tariffs confirmation of that has obviously been around in the news over the last month or 2. Just to get your sense of how you think that could potentially impact your business at all and effective pricing, et cetera?
Tim Di Maulo
So what you’re’ referring is the import duties. This is what you’re trying.
Luke Nelson
Yes, the reduction from 12 to 10, I think.
Tim Di Maulo
So you see that this is no news. It is something that was in discussion since a lot of time. The government is taking some measures to boost the local economy and they’re reforming tax, they are reforming duties, et cetera. So what they do is -- was expected is the first step of reducing the duties, which is 10% only 14. So in fact, it is 1.4% import duty reduction, which is minimal because the -- let’s say, the pricing in Brazil is globally the effect of different components. One is import duties, yes, but we have antidumpings. We have against China, against other Asian producer against Europe. We have also a position in which Brazil is very complex logistics. So to be there, you need to compensate for the logistics and the transport.
So, all-in-all, we see this as a very, very, very minimal effect on Brazil, on top of some, let’s say, there are effects on the exchange rate, et cetera. So -- we don’t see this as an effect of what we expect on the contract is that Brazil is starting the -- all this, let’s say, measure to boost the internal economy. We see the effect of the internal economy already. So the consumption has progressively been better. We have had until now a very good year and there was even better than last year. So, all-in-all, we are very positive on Brazil.
Luke Nelson
Okay. That’s very clear. And my final question is just on ELG. I see in the presentation, still expecting closure by the end of this year. Maybe just give an update on the sort of critical path for that closing? And then, also just in terms of the acquisition price. Can you remind me if there’s any adjustments from a working capital point of view? And if so, if they are material just given the sort of wider changes in working capital we’ve seen?
Tim Di Maulo
Maybe you can take it?
Sudhakar Sivaji
Yes, I’ll take this. So first, Luke, on the process, yes, reconfirm that, as of now, we see that the process will continue and we should have a conclusion by end of Q4. And there’s no critical path as specifically with respect to 1 discussion. We have completed in several jurisdictions. All necessary forms have been filed and now it is up to the authorities, specifically also the European Commission to have their judgment and they have their process and the due time to do that.
So, that’s what is happening. So we keep exchanging with them. No specific topic of discussion which is going on, on the approval process. In terms of the price, right? So what you are talking about is basically we have explained when we spoke about the transaction that we acquired ELG and we paid for the net working capital. So, yes, the net working capital pricing has gone up. And you know from publishing reports what the pricing has gone up. But end of the day, it is net working capital. So any debt is going to be a credit line against that. So it’s not a permanent debt.
So when prices come down, definitely, this net working capital is going to be released. So there is a direct correlation because the value of ELG, which we paid, which we believe is a very good price for such a valuable operation, just that of the working capital helps us to keep this fluid. It’s a lockup principle.
Operator
The next question comes in from the line of Tristan Gresser calling from Exane BNP Paribas.
Tristan Gresser
The first one, if I can ask maybe a follow-up on energy costs, some of your peers have been able to quantify the impact. If you could maybe tell us how much your energy costs have increased in Q3, maybe quarter-on-quarter or year-on-year? Any color there that would be great. And also in terms of expectation, into Q4, you flagged that those costs should increase. Is that a significant increase, or any color there as well would be appreciated.
Sudhakar Sivaji
So on the energy cost, I’m afraid that Tim gave the answer earlier and we specifically cannot go into the specifics on the increase because as Tim said, there’s 2 parts to the equation. One is the squeeze on our cost, but the second is also how much we are able to pass on to our customers, right? So, because, as you know, in our industry, we do have a pricing policy, which is base price for allied surcharges, and we do pass on transformation costs such as energy costs as part of our base prices. So this is very sensitive information. So that’s the reason I can’t specifically tell you quarter-on-quarter how this is changing because it gives direct transparence to the competition on how we price our products. Is that understandable?