Sharp fluctuations in electricity prices in Germany threaten the stable operation of the steel industry

Sharp fluctuations in spot electricity prices on the European energy exchange Epex Spot threaten the stable operation of steel companies in the EU, including Germany. Last week, the German rebar plant Feralpi Stahl temporarily suspended operations due to this factor. This was reported by Kallanish.

On the morning of June 26, 2024, electricity prices at the Epex Spot rose to almost €3 thousand per MWh, and then fell again to about €50/MWh. At the end of the day, prices rose again to an ultra-high level. It is believed that this was due to a platform failure, possibly as a result of a hacker attack.

Significant price fluctuations led to a temporary shutdown of the Feralpi Stahl rebar plant.

«Peak electricity prices were observed only in the morning and evening, while during the day they were normal. But it didn’t make sense to shut down the plant in the morning and start it up only for the daytime (7 hours), so we stopped for 24 hours,» said Uwe Reinecke, CEO of Feralpi Stahl.

According to him, a day’s downtime would have resulted in a six-figure loss, but continuing to operate would have meant a seven-figure loss.

«We get a significant part of our electricity under spot contracts. As a supplier to the construction industry, we have short lead times, which means that long-term electricity supply contracts do not make sense,» Reinecke added.

As GMK Center reported earlier, sales of steel products by German distributors in May 2024 decreased by 8.9% month-on-month to 770.91 thousand tons. The figure was down 4% compared to May 2023.

Steel production for the month decreased by 1.9% compared to the same month in 2023 to 3.19 million tons. The figure was down 2.9% month-on-month. Rolled steel output for the month decreased by 3.4% y/y and 3% m/m – to 2.65 million tons.