Spanish steel group Sidenor will halt steel production for 20 days, or about one third of the remaining working days in 2021, due to soaring electricity prices, the company said Oct. 11.
Sidenor specializes in long steel products and operates four steel production units in the Basque and Cantabria regions of Spain with over 1.5 million mt/yr capacity as well as a forging unit, two bright steel units and two scrap collection and processing units.
The company’s 740,000 mt/yr Basauri plant will be the most affected because of the production cut, although other plants will also feel the impact progressively, it said.
Spanish power prices have hit record highs due to soaring gas prices. Spain’s large power consuming industries received subsidized prices due to interruptible contracts phased out in 2020.
Electricity costs jumped to Eur227/MWh in October, from Eur60/MWh a year earlier, and are expected to rise further to Eur284/MWh in November, Sidenor said in a note on its website.
High electricity prices were adding Eur200 in costs for each mt of steel produced, Sidenor said.
In March, the steelmaker signed a power purchase agreement with energy group Naturgy to acquire 350 GWh per year of renewable energy, equivalent to producing around 600,000 mt/yr of steel, according to S&P Global estimates.
— Gianluca Baratti