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Energy: Collapse of metallurgy in EU
  • The world's largest steelmaker, ArcelorMittal, has announced that it has begun "maneuvering" production facilities at some of its European plants as rising electricity prices hit the pocket of Europe's largest steelmaker.

    The company said it was forced to introduce "short, selective production interruptions" on some of its electric arc furnaces in Europe, which produce so-called "long products" commonly used in the construction sector.

    The company said the pauses were "aligned with hourly / daily changes in electricity prices," adding that they were introduced "in response to surges in energy prices that make it difficult to produce steel without a loss."

    Matt Watkins, chief analyst at consultancy CRU, said that all European electric arc furnace operators faced high electricity costs and suffered heavy losses as a result.

    ArcelorMittal typically produces around 40 million tonnes of steel in Europe per year, of which around 10 million comes from “long products” for the construction industry.

    In Spain, European long products leader Sidenor said it was forced to cut production by 30 percent from now until the end of the year due to "overpriced electricity prices."

    In the UK, the government is considering a plan to bail out the steel industry, as factories could close without government support when the cold weather sets in.

    Several UK steelmakers, including British Steel, will try to impose premiums on certain products from October 1 to mitigate the impact of higher production costs.

    Another steel company, Tata Steel, which operates the giant Port Talbot steel mill in Wales, believes that price increases will only make matters worse, people familiar with the matter say.

    Analysts who monitor the steel market say the metals industry has already been hit by a global chip shortage that has knocked down the auto industry. Falling demand from European car manufacturers began to affect metal orders. This sector accounts for approximately 20% of steel demand in Europe.