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Amid Europe's ongoing energy crisis, the Georgsmarienhütte steel mill in Germany has been compelled to suspend its operations due to soaring electricity costs. The mill, a
significant player in the German steel industry, has warned that without substantial intervention, it faces potential bankruptcy
Electricity prices have surged dramatically, with day-ahead prices reaching €432 per megawatt-hour, compared to pre-2019 levels of no more than €130. This escalation has led to a 71% increase in electricity costs for Georgsmarienhütte since May 2021, with transmission grid fees now accounting for 45% of the electricity price. If these trends continue, the company's energy expenses could escalate from €84 million to €1.2 billion annually, potentially resulting in a €1 billion loss in the coming year
To mitigate costs, Georgsmarienhütte has limited production to nighttime and weekend hours when electricity prices are lower. However, this adjustment has not been sufficient to offset the financial strain. The company has also been unable to implement a planned 20% price increase for its steel products at two locations due to customers opting for cheaper alternatives from countries like China and India, where energy
CEO Alexander Becker has expressed urgency, stating, "We are in a state of shock," emphasizing the critical need for government support to alleviate the financial burden of high energy prices. Without such intervention, the company warns that it could face insolvency within a few months
Georgsmarienhütte's predicament reflects a broader crisis in Europe's steel industry, where several companies are grappling with escalating energy costs and competitive pressures. The situation underscores the urgent need for comprehensive energy policy reforms to ensure the sustainability of the sector.
Ahan Pouya with more than a decade of best-selling experience, adheres to professional and ethical principles in the field of selling and buying at inside and outside the borders of Iran, helping you in the steel industry.
