European Steel and Aluminum Furnaces Shut as Gas Prices Spike

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Europe's crippling energy crisis continues to impact industry as record prices force steel and aluminum makers to idle furnaces.

ArcelorMittal (NYSE:MT), the world's second-largest steelmaker, has announced that it will shut down one of the two blast furnaces at the Bremen flat steel site "until further notice". At its Hamburg long steel mill, which produces quality wire rod, the direct reduction plant will also be shut down from the fourth quarter "due to the current situation and the negative prospects." Short-time work is already in place at both plants, which the company said will have to be expanded as a result of the upcoming measures. Short-time work is already being applied at the production sites in Duisburg and Eisenhüttenstadt. The Bremen plant can produce more than 3.6 million tons of crude steel per year, while the Hamburg plant is one of the largest manufacturers of quality wire rod in Germany with an output of around 570,000 tonnes per year.

In the Netherland's, aluminum maker Aldel (Damco Aluminium Delfzijl Coöperatie) revealed that it was mothballing the remaining capacity at its plant in Farsum, blaming "skyrocketing energy prices and a lack of government support."

Industrial Info reported recently on the impact that spiraling gas prices were having on the European ammonia and fertilizer sectors.

"The high costs of gas and electricity are a heavy burden on our competitiveness," said Reiner Blaschek, chief executive officer of ArcelorMittal Germany, who is responsible for the plant in Bremen. "In addition, from October there will be the gas levy planned by the federal government, which will continue to burden us. As an energy-intensive industry, we are extremely affected. With gas and electricity prices increasing tenfold within just a few months, we are no longer competitive in a market that is 25% supplied by imports. We see an urgent need for political action to get energy prices under control immediately."

At Hamburg, chief executive officer, Uwe Braun, explained: "We have already greatly reduced gas consumption. Among other things, we bought the pre-product sponge iron externally from America, for which we would otherwise have used natural gas locally. The plant has already reduced operations by around 80%. The extreme price increase for gas and electricity makes it impossible for us to continue to work profitably--which is why we now have to import all of the sponge iron with a higher CO2 footprint in order to at least be able to continue producing".

Aldel explained its decision to mothball Farsum: "The production of aluminum is energy intensive. The decision to stop production is the result of the current, sky-high gas and electricity prices in the Netherlands. The Dutch government has not provided any support or relief to reduce the extremely increased energy costs for Damco and other comparable energy-intensive companies."

Last year, the company was forced to shut down the electrolysis process at the plant, where liquid aluminum is produced, citing the combination of high electricity costs and the continuing uncertainty about the continuation of indirect CO2 cost compensation by the Dutch government. Only the foundry remained operating. "As a further consequence of the current negative market conditions, Damco is now also forced to shut down the foundry," it added: "Damco has decided to stop all production. It is regrettable that the Dutch government is not making sufficient use of the support options put forward by the EU, including the recently launched packages "REPowerEU" and "Save Gas for a Safe Winter." Other countries in the EU do make use of this, which means that even within the EU there is no level playing field. Damco regrets that the announced shutdown decision will affect the majority of its 200 employees."

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