Spanish steel industry fears surge in electricity costs

The final cost of carbon pricing mechanisms varies across industries. While the energy industry can easily pass on the added cost of emissions to their customers, other industries, such as steel, find it harder. Some fear this could lead to a squeeze on margins in industries which face international competition. EAF steelmakers in particular are looking to the European Commission to propose rules for compensation by the end of the year.

SBB 27 May The Spanish steel industry is concerned about electricity costs rising further from the second half of 2013, Steel Business Briefing learns from Andres Barceló, general director of the country’s steelmakers’ association Unesid.

In 2013 electricity and utility companies will start targeting price increases following the start-up of phase three of the Emission Trading System (ETS) in the EU. These companies won’t be allocated any free carbon dioxide allowances and will try to pass on these higher costs to their clients, Barceló told SBB’s recent Steel Markets Europe conference in Barcelona.

“Spain will be particularly hit, being partly isolated from the European network. All over Europe prices will rise. Only France, having a strong nuclear production, may be hit to a lesser extent,” he explains.

The Spanish industry, with 70-75% of crude steel produced in electric arc furnaces, has been highly concerned about energy costs for some time. Local mills frequently check electricity prices and, in some cases, stop production when they get too high, he says. Around €30-50 are spent in Spain for producing 1 tonne of crude steel, SBB calculates.

“In Spain we are still repaying the costs of the renewable energy investments made in the past,” Barceló adds.

Eurofer and national steel associations are trying to pressure authorities to avoid such increases, but they are expected to be implemented, SBB notes.


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