The steel industry in Germany and the energy crisis

The steel industry in Germany is affected by the energy crisis. Industry representatives claim that political action is urgently needed to keep energy prices under control.

Photo source – forbes.ro

Gazprom has suspended gas deliveries through the Nord Stream 1 gas pipeline, currently indefinitely. The announcement made on September 5, 2022, by Vladimir Putin’s spokesman, was followed by a 30% increase in the price of gas on the European stock exchanges.

Germany’s strategic mistake regarding dependence on Russian gas is also felt in the steel industry.

The REESE Group, founded in 1948, consists of four metal tempering technological centers in Bochum, Brackenheim, Chemnitz and Weimar.

The 200 installations for the thermal treatment of steel and other metallic materials consume a lot of energy.

The hardness and wear resistance of steel is amplified by exposure to heat of up to 1000 degrees. The main source of energy used in this industrial sector is natural gas. In the event of a drastic gas shortage, the steel tempering furnaces could be shut down. „We can’t do without gas”, Philip Reese – managing director of the tempering plant in Bochum.

The steep rise in electricity and gas prices puts enormous pressure on all steel production activities in Germany.

The steel industry in Germany affected by the ArcelorMittal decision

ArcelorMittal announced on September 2, 2022 that it will shut down one of the two furnaces at its steel plant in the German city of Bremen until the end of September. This closure is caused by the high cost of gas, weak market demand and negative economic prospects.

The company is the number 1 producer in Europe and the number 2 in the world.

According to reuters.com, ArcelorMittal stated that it will also close the direct reduction facility at the Hamburg steel plant. Action planned for the fourth quarter of this year. At the same time, the shorter working hours of the workers in both locations are maintained.

The company’s representatives declare that in a few months the prices of gas and electricity have increased tenfold. Under these conditions, the company is no longer competitive on a market supplied with 25% of imports.

A survey conducted among 3,500 companies from all industries and fields in Germany shows that approximately a quarter of those forced to reduce their production have already done so. And another quarter are in the process of taking this measure.