Steel mills in Spain suspend production due to high electricity costs

Spanish steelmakers have cut output at their power-hungry blast furnaces after electricity prices soared to record highs following the Russian invasion of Ukraine.

Andres Barcelogeneral director of the national employers association of steel producers Unesidsaid mills halted production on the afternoon of March 8.

Since then, many have been producing at a reduced rate to lower costs, Unesid and some local steelmakers said.

Electricity costs have skyrocketed along with gas costs following the Russian invasion of Ukrainewhich is a headache for energy-intensive industries such as steel, as producers cannot pass on all of the increased costs to their customers.

Steelmakers have resorted to buying power on the spot market, where prices are at record highs, a spokesman for ArcelorMittal.

As a result, ArcelorMittal has stopped operating during peak hours, that is, about a third of the time, at its plant in Olaberria, in the Basque Country, the spokesman said.

The company will also extend the scheduled closure of another plant in nearby Sestao for 10 days, until March 23, and plans to close a third plant in Gijón, in Asturias, between March 24-28.

Spanish stainless steelmaker Acerinox said it has halted production at its only plant in Spain, in Algeciras, in the far south of the country, while unlisted producer Celsa, whose Barcelona factory has annual capacity of 2.5 million tons, also cut production, pointing to unsustainable energy costs.

“We are meeting the demand of our customers, but our ovens work at different times to adapt to electricity prices”, said a Celsa spokesman.

Other non-listed steelmakers, such as megasa and Balboa Steelalso halted production, at least partially.

To protect steelmakers, Unesid has asked the Spanish government to change the regulations to decouple electricity from international gas prices.