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.
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.
Soaring energy prices have sent shivers through global markets.
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.”
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.”
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.”
Energy price surge sends shivers through markets as Europe looks to Russia
(Reporting by Pratima Desai, Jacob Gronholt-Pederson, Michael Hogan, Victoria Klesty, Gus Trompiz and Essi Lehto; Editing by Hugh Lawson and Edmund Blair)
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