October 1, 2022

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The steel fist of the crisis.  Steel plants and factories reduce production due to higher energy costs

The steel fist of the crisis. Steel plants and factories reduce production due to higher energy costs

Recent problems of production plants Fertilizer Azoty and Anwil as well Cerradu, one of the largest producers of ceramic tiles In Europe, this is just a preconceived notion of the crisis that lies ahead. Rising prices for energy, gas and raw materials affect the so-called energy-intensive industries.

The situation is becoming grave with more factories, and even entire industries, reporting a problem with the prices of energy resources, especially coal and gas. The crisis is not so much up in the air as making it directly palpable as successive factories reduce production or stop production at all. This is the case, for example, in the steel market.

– In recent weeks, we have seen a flurry of announcements from European steel mills about suspending or limiting production due to rising energy and gas costs. Including Large plants in Bremen, Dunkirk, Kosice, Ostrava and Taranto. This week, the Ferrer Nord steel mill, affiliated with the Italian group Pittini ., joined this group – Lists in an interview with money.pl Iona Debach, President of the Polish Federation of Steel Distributors.

The outbreak of war in Ukraine has already pushed up the price of structural steel to high levels. At the beginning of March 2022, the record price per ton was 9.5 thousand PLN. For ribbed bars used, among other things, in formwork prices It started from 7.7 thousand. PLN amounted to 10 thousand. zloty per ton.

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Production is declining

For factories, such a significant increase in costs and a decrease in the availability of raw materials means the need for significant savings on the one hand, and an increase in prices on the other – admits President Iona Debach.

The same problem applies to steel mills. It also still relies on gas (such as Poland’s ArcelorMittal smelter in Krakow, which uses LNG delivered to Świnoujście) or coal. as it grows Energy prices by 500-600 percent.The cost of steel production and scrap processing has increased, and its production will decrease, which should also translate into an increase in prices.

According to the latest World Steel Association data from July, global steel production fell 6.5 percent, to 149.3 million tons. 3.5 million tons were produced in the European Union alone, which means a decrease of 6.7%.

– Since May, steel production in the world and in the European Union has decreased due to the level of demand, which is now intertwined with the problems of high energy prices – explains the head of the Polish Union of Steel Distributors.

In the fall, the problem will only get worse

Autumn is traditionally a period of warehouse replenishment, so there may be concerns that greater purchasing activity for distributors and processors will result in less supply from mills. – warns President Depay.

In response, Europe reached an agreement to reduce the demand for gas. It assumes a voluntary 15% reduction in consumption.. Even before winter and during winter. However, is this enough to ensure the operation of the economy, especially in the companies that consume the most energy?

However, the concern is deepening as the Kremlin has made other decisions, which are ruthlessly waging a gas war with Europe. Gazprom turns off the tap to other countries. According to recent reports, France has just been cut off from Russian gas. Germany is still under surveillanceWhich also affects metallurgy.

– Another issue is the possible rationing of gas in Germany, for example. Deliveries of this raw material to our western neighbors are very limited and local steel mills are preparing for the possibility of limiting production also for this reason – confirms Iona Dibau.

This is not the first game of this kind for Russia. Already in mid-July, Gazprom threatened European buyers after a period of 10 days Pipeline maintenance, the tap can be closed for a longer time, End the crisis in the old continent.

Przemysław Ciszak, journalist at money.pl

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