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Aluminum producer Speira GmbH is considering cutting production at its German smelter to 50% of total capacity in response to surging energy costs that are squeezing power-intensive industries across Europe.
Speira — which was part of Norsk Hydro ASA’s aluminum business before being sold to KPS Capital Partners last year — can produce about 160,000 tons of aluminum at its plant in Neuss, although it’s currently only making about 140,000 tons. It will make a decision on the additional curtailment in September, Moritz Hansen, head of communication and marketing at Speira, said by phone.
The curtailment would add to the extreme toll that the energy crisis is having on Europe’s metals industry, which is one of the biggest industrial consumers of power and gas. The region’s aluminum and zinc production capacity has fallen by about 50% within the past year, and industry groups have warned of further closures over the winter months. Just last week, zinc producer Nyrstar and Norsk Hydro both announced plans to close a zinc and aluminum smelter, respectively.
At Speira, “we can confirm there is a consideration to curtail 50% of our production until further notice, but this hasn’t been decided yet,” Hansen said. Current market prices for energy are exceeding London Metal Exchange futures prices by far, he said.
Aluminum is one of the most energy-intensive metals to produce, and long-term power supply deals and energy hedges have only provided partial cover against the surge in electricity prices over the past year. Now, some smelters are moving to shut down production entirely, in a move that could put a long-term dent in regional supply and leave consumers more reliant on imports.
While an initial round of curtailments sent aluminum rocketing on the London Metal Exchange earlier this year, prices have since been hammered by worries about a looming slump in demand. Weaker prices are piling further pressure on smelters, which would be deeply loss-making if they were fully exposed to prevailing energy prices in countries like Germany and France.
Speira is also a significant consumer of gas at plants that turn commodity-grade aluminum into specialized products used in car-making, packaging and other sectors. Those plants are also facing a sharp rise in costs arising from gas-security levies that are being applied in Germany, Hansen said.
(By Mark Burton)
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