European metals cutbacks continue

Energy prices have risen steadily and sometimes rapidly in Europe ever since Russia invaded Ukraine at the end of February. With Russia again having closed a high-volume natural gas pipeline, costs remain high and several metal producers have idled melt shops.

September announcements in the steel sector include ArcelorMittal reportedly shutting down a blast furnace in Poland, though a report from United Kingdom-based Kallanish cites “deteriorating demand” rather than rising costs. United States Steel Corp. reportedly has shut down a blast furnace at its mill in Slovakia, though it has called the 60-day shutdown planned maintenance.

In August, reports circulated that an Aperam stainless steel mill was staying idle for longer than originally anticipated, with the company’s Bernard Hallemans telling a Belgian newspaper, “We collect old scrap and melt it down into stainless steel. We mainly melt this at high temperatures in ovens that run on electricity. In the past, we spent tens of millions of euros per year on gas and electricity; at current prices, it is several tens of millions per month.”

In the aluminum sector in August, Hydro, which owns a majority stake in Slovalco, a primary aluminum smelter in Slovakia, announced it was terminating primary production at the site in response to adverse framework conditions and high electricity prices, though it plans to maintain recycled production.

Even before the war in Ukraine, two global aluminum producers cited rising energy costs when announcing cutbacks at primary aluminum production sites in Europe.

U.S.-based Alcoa Corp. in late December 2021 announced it had reached an agreement with workers’ representatives at its San Ciprián aluminum plant in Spain “aimed at resolving ongoing challenges that stem from exorbitant energy prices.”

Also in late December, Hydro announced initial cutbacks in Slovakia that, about eight months later, led to the August announcement that it was ceasing primary production there.

This month, Bloomberg has reported two additional aluminum sector cutbacks tied to “surging energy costs.” One involves Speira GmbH cutting production at its smelter in Germany by 50 percent while the other entails Aluminium Dunkerque Industries France reducing production by 22 percent.

In a September letter to EU officials, Brussels-based nonferrous metals trade group Eurometaux characterized its concerns this way: “The business leaders of Europe’s nonferrous metals industry are writing together to raise the alarm about Europe’s worsening energy crisis and its existential threat to our future. Our sector has already been forced to make unprecedented curtailments in the last 12 months.”

Adding concerns about the winter ahead, Eurometaux continues, “We call on EU and Member State leaders to take emergency action to preserve their strategic electricity-intensive industries and prevent permanent job losses. Fifty percent of the EU’s aluminum and zinc capacity has already been forced offline due to the power crisis, as well as significant curtailments in silicon and ferroalloys production and further impacts felt across copper and nickel sectors.”

In the ferrous sector, rising energy costs also made the agenda earlier this month when Federal Association of German Steel Recycling and Disposal Cos. (BDSV) took part in a discussion with an elected official in Germany.