European scrap consumers hit by energy price shocks

European scrap consumers hit by energy price shocks

Russia’s invasion of Ukraine sparks loss-inducing costs in steel, containerboard sectors.

March 14, 2022

Restricted access to Russian natural gas and oil in Europe has quickly led to production cutbacks at facilities that consume scrap materials in nations there, including Germany and Italy.

In Germany’s steel sector, the Düsseldorf-based Federal Association of German Steel Recycling and Waste Disposal Companies e.V. (BDSV) say in a mid-March press release that “the invasion of Russian troops into Ukraine at the end of February has far-reaching effects on German and European industry, including steel recycling companies.”

The BDSV thus called for elected officials “to initiate financial relief for affected companies as quickly as possible so that the climate protection goals laid down in the EU Green Deal can be achieved.”

According to BDSV General Manager Thomas Junker, “The steel recycling industry is particularly affected by the already extremely high energy costs. Electricity costs are currently highly volatile in response to Russia’s attack on Ukraine. These price increases are a major burden for our member companies because steel recycling requires large amounts of energy in order to be able to produce and supply valuable raw materials for the steel industry and foundries.”

BDSV President Andreas Schwenter says, “Companies from the steel recycling industry make a valuable contribution to the circular economy and thus to the urgently needed decarbonization of the industry. However, they can only fully fulfill this important task if the energy supply is secured and energy can be purchased at reasonable prices. This requires support from politicians in order to noticeably relieve the burden on companies and to get effective instruments on the way to lowering energy prices.”

A mid-March AP news item reports both steel mills and recycled-content containerboard mills in that nation are being idled because of sudden supply cutbacks to natural gas and other Russian-supplied energy sources.

In the metals sector, AP says steel producer Acciaierie Venete idled three of its steel mills in Italy “for a few days” in March as energy prices “spiked to 10 times above normal.” It quotes an executive of the firm as saying, “Never, ever has this happened that we had to shut down ovens.”

In the containerboard sector, AP quotes Francesco Zago, CEO of Italy-based paper and packaging manufacturer Pro-Gest, as saying that after price spikes, the board producer found itself “facing huge losses.”

The paperboard CEO told the news service the company had suspended operations at six recycled-content paperboard mills, and that to resume operations Pro-Gest would have to “nearly double prices” from 680 euros ($743) per ton to 1,200 euros ($1,310), which he called “not doable on the marketplace.”