Spiralling energy costs have forced steel makers to cut output across Europe, threatening mass plant shutdowns some warn could be permanent in a sector that employs more than 300 000 and contributes tens of billions of euros to the region’s economy.
Even with four wind turbines and over 50 000 solar panels at its site in eastern Belgium, stainless steel maker Aperam has been forced to halt production as surging energy prices bite.
The company is now paying for energy in a month what it used to pay in a year and has idled a facility that would normally be melting stainless steel scrap and converting it into giant slabs, employing about 300 workers.
“We have temporary levers to overcome a certain period but this cannot last for years,” Aperam’s European chief Bernard Hallemans told Reuters from the quiet inside of the plant.
“If this (does), we will see a de-industrialisation of sectors like ours and Europe will also, for base metals like ours, become dependent on imports.”
Summer maintenance would normally cap production at about 80% of capacity, but Hallemans says the figure is around 50% since late June, after Russia sharply cut gas supplies to Europe, sending already inflated prices to new records.
Imports into Europe, largely from Asia where energy prices are far lower but the carbon footprint higher, have risen from 20-25% in 2020 and 2021 to 40% this year, peaking at around 50% in the past weeks.
Hallemans says Europe must come up with answers. According to a McKinsey report last year, steel contributes about 83 billion euros ($80.97 billion) in direct value added to the region’s economy, directly employing 330 000 people.
The European Commission says EU trade defence measures protected 195 000 jobs in the steel industry in 2021, although critics say the energy cost gap is now so high that imports can be cheaper even with additional protective tariffs.