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Current gas, electricity prices threaten European steelmaking viability: Eurofer

The EU needs to take immediate emergency measures to overcome the region’s current “life-threatening energy crisis,” European Steel Association Eurofer said Sept. 9. High energy prices are putting the viability of steelmaking in Europe at risk, and have forced numerous mills to halt installations, it said.

Eurofer’s statement, coinciding with an extraordinary meeting of the EU Energy Council in Brussels, called on EU policymakers to provide immediate relief against high energy prices and costs also for energy-intensive industries exposed to international competition.

According to The European Council’s website, the Sept. 9 Energy Council meeting was a discussion between EU ministers on temporary emergency measures and policy options to alleviate the burden of high energy prices on citizens, public services, businesses and industry. The measures would need to be implemented at EU-level in a short timeframe, because the energy crisis was seen to have significantly worsened in recent weeks.

“The discussion conveyed four main areas in which the member states expect the Commission to act. These include capping the revenues of electricity producers that face low production costs; a possible price cap on gas; measures for a coordinated electricity demand reduction across the EU; measures that would help to solve the issue of decreased liquidity,” the EC website report said.

“Ministers called for swift action and the presidency expressed its determination to handle the forthcoming Commission proposals in an expedited manner,” it said.

Formal proposals to alleviate the situation are to be made by mid-September, according to the EC report.

Eurofer said in its statement that “conventional trade and energy policy measures are clearly insufficient” and would put the survival of EU steelmakers and other energy-intensive industries exposed to international competition at risk. These are “the backbone of the EU’s value chain,” the association said.

“The current gas and electricity prices threaten the viability of steelmaking in Europe, while third country producers not subject to such constraints or whose governments do not take similar action against the Russian aggression take advantage of the situation by exporting massively to the EU at distorted prices,” Axel Eggert, Eurofer director general, said.

“As a consequence, in Europe we are witnessing steel plant closures, production curtailments and layoff programmes. The war in Ukraine and the subsequent, necessary EU sanctions against Russia have thrown the EU into an exceptional crisis which requires exceptional and immediate measures by EU policymakers to prevent the destruction of Europe’s industrial base,” Eggert said.

Steel imports into the EU continued to increase significantly in the first quarter of 2022, rising 28.8% year on year, Eurofer said in its late-August economic report. Despite a limited year-on-year rise of 0.4% in Q2, import penetration over the last quarters has remained considerably high, the association said.

Some of the exporters to the EU do not share the region’s climate ambitions, Eggert noted.

A Eurofer spokesperson was not aware of any specific Eurofer meeting scheduled with EU authorities or policymakers on the energy topic at this stage. However, the European steel industry is ready to contribute to the efforts of European policymakers in developing concrete solutions to overcome the crisis and deliver a more united and prosperous EU, Eggert said.

“An EU-wide response is necessary for Europe to overcome the emergency, while pursuing further integration of the national energy markets. Given the severity of the crisis, a package of different solutions is needed, and no option should be left off the table,” the statement said.

Output cut, prices still falling

Companies including ArcelorMittal, Salzgitter, Arvedi, Acciaierie d’Italia, Marcegaglia, NLMK Strasbourg, Acerinox, Stahl Gerlafingen, Izmir Demir Celik, Liberty Ostrava, HBIS Serbia, US Steel Kosice and Metinvest have halted steelmaking or rolling capacities in Europe over recent weeks, or announced forthcoming stoppages or delays in equipment restarts, as a result of high energy prices and/or weakening market demand, particularly from the automotive and white goods sectors.

Platts assessed hot-rolled coil down Eur30/mt at Eur760/mt ($763.80) ex-works Ruhr Sept. 9, with market participants seeing potential to negotiate discounts amid high stocks and uncertainty over impending energy cap decisions, according to S&P Global Commodity Insights.

The product’s price has plunged from a peak of Eur1,460/mt on March 18, after Russia’s invasion of Ukraine provoked fears of supply tightness.

The EU steel sector typically has a turnover of around Eur125 billion and directly employs around 310,000 highly skilled people, producing on average 153 million mt/year of steel, at more than 500 production sites across 22 EU member states.

— Diana Kinch