Posted on Dec. 2021 at 18:19
The energy crisis turns into a puzzle for European metal producers. Due to the surge in electricity and gas prices to record levels, several manufacturers have been forced to reduce or even cease production.
Over the past two weeks Aluminum Dunkerque, the largest European aluminum smelter, has for example reduced its production. A trade unionist tells Bloomberg that the French plant has lost around € 20 million since the start of November.
The manufacture of this metal is energy intensive. It is no coincidence that manufacturers sometimes have fun saying that aluminum is nothing other than solid electricity. It takes around 15 MWh of electricity to produce a ton of metal in Europe according to the International Aluminum Institute.
350 euros per MWh
However, electricity prices are soaring to unbearable levels for manufacturers. In France, for example, the reference price of electricity on the wholesale markets, for delivery in twelve months, exceeded 350 euros per MWh at the start of the week, a new historical record.
Nyrstar, one of the major zinc producers, faces the same difficulties. On Friday, the group warned that the Auby plant in the North, the last zinc production site in France, will be shut down in early January for at least 2 months.
The plant had admittedly subscribed to the ARENH mechanism in 2011 allowing electro-intensive industries to purchase historic nuclear electricity from EDF at 42 euros per MWh, but this contract now only covers 56% of the consumption of electricity. site.
The rest of the electricity must be bought on the “spot” market, in cash, where prices have exceeded 400 euros per MWh, warned Ludovic Bouvier, representative of CGT Métallurgie in Hauts-de-France.
Metals on the rise
Under these conditions, producing is not profitable. “There is no bluff. […] we are facing a wall ”, lamented the director of the factory Xavier Constant, referring to“ unimaginable prices ”. To produce 170,000 tonnes of zinc, the plant consumes 73 GW of electricity each year, the equivalent of “Lille and its suburbs”.
On the London Metal Exchange, prices started to rise again in early December due to gloomy production prospects. A tonne of aluminum is trading at more than $ 2,800, up 43% since the start of the year. Zinc rose 28% to $ 3,500 per tonne.