Spain's electric steel mills cut output amid soaring power prices (updated)

Ferroglobe

10/03/2022 15:04

(Adds comments from industry group and steel makers)
    By Christina Thykjaer
    MADRID, March 10 (Reuters) - Spanish steel makers have cut
output at their electric-powered mills after power prices
skyrocketed to record highs following Russia's invasion of
Ukraine.
    Andres Barcelo, the general director of national steel
producers' association UNESID, told Reuters on Thursday that the
steel mills halted production on the afternoon of March 8. 
    Since then, many have been producing at a reduced rate to
lower costs, UNESID and some local steel producers said.
    Electricity costs have surged in tandem with gas prices
following Russia's invasion of Ukraine, creating a headache for
power-intensive industries like steel, as producers are unable
to transfer all the increase in costs to their customers.
    Wary of signing long-term contracts with utilities, which
would lock in current high prices, steel makers have resorted to
buying electricity on the spot market where prices are at record
highs, a spokesperson for ArcelorMittal  MT.LU  said.    
    As a result, ArcelorMittal has stopped operating during peak
hours, or about one third of the time, at its Olaberria plant in
the Basque Country, the spokesperson said.
    The company will also extend a scheduled closure of another
plant in nearby Sestao for 10 days until March 23, and plans to
close a third plant in Gijon, in Asturias, between March 24 and
28.
    Spanish stainless steel maker Acerinox  ACX.MC  said it had
halted production at its only plant in Spain, in Algeciras at
the southern tip of the country, while privately held producer
Celsa, whose Barcelona mill has an annual capacity of 2.5
million tons, also cut output, citing unbearable energy costs. 
    "We are meeting the demands of our customers but our
furnaces are operating at different hours to adapt to
electricity prices," a Celsa spokesperson said.
    Other privately held steel makers such as Megasa and
Siderurgica Balboa also halted output at least in part. 
    To protect steel makers, UNESID has asked the government to
change regulations to decouple electricity from international
gas prices.

 (Reporting by Christina Thykjaer and Inti Landauro
Editing by Nathan Allen and Mark Potter)
 ((Inti.Landauro@thomsonreuters.com;))