Speira is Considering Reducing the Production of its German Aluminium Smelter to Cope with the Soaring Energy Prices

SHANGHAI, Aug 24 (SMM) - Speira, a large European aluminium rolling company, is considering cutting the output of its German aluminium smelter to 50% of the total capacity to cope with soaring energy prices. Speira said it would decide on whether to cut production in September.

According to the data, Speira was once the aluminium rolling division of Norsk Hydro ASA, one of the largest aluminium producers in the world. Last year, it was sold to KPS Capital Partners and became an independent company under it. Speira's factory in Germany can produce about 160,000 mt of aluminium, but the current output is only about 140,000 mt.

Soaring energy prices are squeezing profits of power-intensive industries across Europe, and Speira's production reduction will aggravate the impact of the energy crisis on the European metal industry. The metal industry in Europe is one of the largest consumers of electricity and natural gas, but the aluminium and zinc production capacity in this region has dropped about 50% in the past year. Last week, Nyrstar and Norsk Hydro announced their production suspension plans of a zinc smelter and an aluminium smelter, respectively.

Aluminium is one of the metals with the largest energy consumption in the production process. Long-term power supply agreements and energy hedging only provide partial protection against the soaring electricity prices in the past year. At present, some aluminium smelters have suspended their production completely, which may affect regional supply for a long time and make consumers more dependent on imported goods.

Meanwhile, Speira's factories are also big consumers of natural gas. These factories convert commodity-grade aluminium into special products for automobile manufacturing, packaging and other industries, but they are faced with a significant increase in the cost caused by the gas safety tax in Germany.

Although the first round of production reduction caused the LME aluminium prices to soar earlier this year, the fear of a possible sharp drop in demand has been suppressing the prices. The falling aluminium prices have put further pressure on smelters.