Factbox: Power crunch pressures Europe's silicon and ferro alloy producers

Nyrstar NV

07/10/2021 16:43

(Adds Ferroglobe, Nyrstar)
    LONDON, Oct 7 (Reuters) - Power shortages in Europe and
record high electricity prices could lead to output cuts of key
materials such as silicon used to make solar panels, aluminium
alloys for the auto industry and semiconductors.
    CRU analyst Jorn de Linde estimates Europe accounts for
13%-15% of global silicon production, or about 3 million tonnes.
The power crunch may also trigger cuts in production of ferro
alloys such as those made with magnesium, chromium and silicon.
 urn:newsml:reuters.com:*:nL1N2R11JB
    Non-ferrous metals industry association Eurometaux told the
European Commission last month that soaring power prices could
lead to metal producers moving operations away from Europe and
undermine EU carbon-cutting plans.  urn:newsml:reuters.com:*:nL8N2QS0GK
    Soaring energy prices have sent shivers through global
markets.  urn:newsml:reuters.com:*:nL8N2R24MZ
    Following are comments from some of Europe's silicon and
ferro alloys producers.
    
    GERMANY'S RW SILICUM
    "Sadly, the outlook for the future is very poor and
ultimately our production could be replaced by Chinese output." 
    "Developments on the energy markets are hitting us very
hard. Our production is primarily influenced by the price of
electricity and coal."
    "The massive price increases, above all for next year, means
we are facing big problems."
    "By rights we must stop production at such prices, but we
have still to fulfill long-term delivery contracts."
    "As the sole German producer of the metal silicon we produce
a raw material for the solar industry."
    
    SPAIN'S FERROGLOBE  GSM.O  
    "Ferroglobe operates in an energy intensive industry, hence
the current energy pricing environment, particularly in Spain,
is having an adverse impact on our business."
    "In recent weeks, we temporarily shut down one furnace at
the Sabon (Spain) facility and a furnace at our Boo (Spain)
facility to best manage through the energy crisis in Spain."
    "The company is trying to manage through this unusual period
in Spain by scaling back production during peak pricing periods,
as well as leveraging its global asset base by allocating some
orders to facilities in other near-by countries where the
increase in energy cost has not been severe."  urn:newsml:reuters.com:*:nL1N2QU11Q
    
    BELGIUM'S NYRSTAR  NYR.BR 
    "Nyrstar's fully electrified zinc smelter in Budel-Dorplein,
the Netherlands, is curtailing production during peak times of
day when power prices exceed the break-even cost of production."
    "This is in response to the surge in regional power prices
over the past year."  urn:newsml:reuters.com:*:nL1N2QQ1S6
    
    NORWAY'S ELKEM  ELK.OL 
    "In most of our markets, we have secured power costs through
long-term contracts. As a result, we see little immediate impact
from the current increase in spot prices for electricity."
    "Elkem is currently producing at normal capacity level."
    
    FRANCE'S ERAMET GROUP
    "The group's  ERMT.PA  electro-intensive activities, in
particular its transformation plants in France, will be
considerably impacted by the rise in energy prices if the
situation continues in 2022."
    
    ERAMET NORWAY
    The company is part of Eramet Group. It produces manganese
ferro alloys.
    "We use very large quantities of energy - 2,000 GWh a year -
so naturally the power prices mean a lot to us, but at the same
time most of what we use are on long-term contracts."
    "There is a small part that goes on spot as well, so that
affects us."
    "There is a connection between prices on raw materials and
prices on the finished products, and what we are seeing at the
moment is that prices on our products are high which means we
can take a bit higher raw material costs, including energy."
    
    FINLAND'S OUTOKUMPU
    Outokumpu  OUT1V.HE  said its operations had been partly
affected by the power crunch in Europe but it had not cut output
and that its hedging process includes fixed price supply
contracts and partial ownership in power utilities.
    "The impact of the rising price of electricity has been
mitigated by our hedging policy."
    "Outokumpu is following its own hedging policy in energy
procurement, and significant amount of the energy in use has
been hedged during past year and with long-term agreements."

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Energy price surge sends shivers through markets as Europe looks
to Russia     urn:newsml:reuters.com:*:nL8N2R24MZ
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 (Reporting by Pratima Desai, Jacob Gronholt-Pederson, Michael
Hogan, Victoria Klesty, Gus Trompiz and Essi Lehto; Editing by
Hugh Lawson and Edmund Blair)
 ((pratima.desai@thomsonreuters.com; +44 207 513 5681;))