As our colleague Fouad Egbaria noted this week, rising power costs in Europe, almost wholly down to the cost of natural gas, resulted in reduced output at Europe’s largest aluminum smelter, Aluminium Dunkerque Industries France. Losses there ballooned to €20 million ($22 million) during November, as natural gas prices quadrupled this year.
Most aluminum smelters operate on long-term power contracts. However, spot prices do impact costs for many mills, either with contracts linked to spot prices or when contracts come up for periodic adjustment when the prevailing spot price comes into play.
So, it is hardly surprising that the Dunkerque smelter is but the tip of the power crunch-induced iceberg.
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Alcoa announces production halt in Spain
In a separate post, Bloomberg reported Alcoa Corp. is set to halt primary aluminum production at its plant in Spain, Europe’s second-largest aluminium plant, for two years, depriving the European market of valuable supplies at a time of near-record demand. Bloomberg reports Alcoa’s advice that the smelter will continue to supply strategic clients in the pharmaceutical and food industries by remelting aluminum, while maximizing billet production of 65,000 tons per year and producing more than 25,000 tons of aluminum slab, but no primary smelting of virgin ingot.
Nor are the aforementioned smelters alone in announcing closures.