Industrial Stoppage Due To Rise In Energy And Raw Materials Price

When the economy seems to be pointing to a reactivation after the harsh months of the pandemic, energy has become an increasingly heavy drag. The rise in gas prices, and therefore electricity, is making it more profitable for some companies to stop their activity and thereby contain the impact of the energy bill, than to comply with what their customers demand.

Sources close to large companies state that “the impact is especially significant among large industrial consumers.” Regarding the rise in prices of raw materials, Bernardo Velázquez, CEO of Acerinox, declared exclusively for the Economistthat “it is not that there is a lack of materials, there is plenty to meet the real demand, but not to rebuild at the same time the stocks of the entire supply chain. This leads us to have to lengthen our delivery times, which historically leads to a rise in prices “.

The Sidenor steel company was the first to announce a 20-day break due to the “exorbitant prices” of electricity, a decision that has been joined by other companies that have reduced their production, such as Fertiberia, Ferroatlántica and Asturiana de Zinc .

Sidenor’s bill has tripled in the last year, from 60 to 260 euros per megawatt and, according to data provided by the company, the impact on costs has been 25%. “It is impossible for us to maintain the current production rate,” the company said when communicating the “urgent” measure.

Fertiberia, an Andalusian fertilizer manufacturer, has also taken measures and temporarily halted its activity at the Palos de la Frontera plant (Huelva). The high price of gas, which is used to produce the material with which they work, has been the cause of the decision.

The measure was approved on October 1 and is expected to last one month for now. The company has declared that “it will take the opportunity to carry out some maintenance work on the plant.”

Asturiana de Zinc has also reported that it draws up a plan to reduce production at certain times of the day due to increased energy costs, “which cause the activity to be unprofitable in certain time slots,” they declare.

The latest addition to this initiative has been ArcelorMittal, which has decided to temporarily suspend its production in some of its plants at certain times due to high energy costs. The company has admitted that it has been forced to take a “short and selective production hiatus” on some of its electric arc furnaces in Europe.

For the moment, the measure will be applied only in the electric steel mills for long products, that is, two of the four they have in the Basque Country, specifically that of Olaberria and Bergara. The Olaberria steel mill produces medium sections for construction, while the Bergara mill processes the semi-finished product that arrives from the first and light sections for the same sector.

The company has pointed out that it is “monitoring the situation on a daily basis” and “short and selective stops” are already being undertaken. in the peaks with the greatest impact on the price of electricity. The increase in costs especially affects these companies belonging to the electro-intensive sector and tile companies, which need a large supply of gas to operate and which have also announced shutdowns for the month of November.

Aid for the sector
The Association of Large Energy Consumers (AEGE), states that energy can account for up to 60% of total costs and requests compensation and exemptions to face an escalation that began five months ago and that, if this continues, they lament that “it will lead to disaster, with bankruptcies and shutdowns in the industry.”

According to AEGE calculations, its companies assume loads that do not exist in other countries, “at the end of August they paid a megawatt hour at 96.82 euros, 34 euros more than in Germany and 55 euros more than in France, a difference that undermines the competitiveness of Spanish firms in the international market “. The employer also considers that it is necessary to have more long-term contracts with electricity retailers, with fixed prices and away from the fluctuation of the wholesale market.

In June, the Government approved a compensation of 100 million euros in order to help the electro-intensive industry to cope with the extra costs due to CO2 emissions. Despite this, the sector continues to classify the funds as insufficient because, as they state, “it is below the ceiling of 220 million that Brussels allows and because it is much lower than that disbursed by Germany and France.”

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