Bills Are Too High! Another Giant Is Ready to Close the Factory!

Another victim of soaring electricity prices in Europe.

Recently, the global aluminum giant Norsk Hydro announced that it will close its aluminum smelter in Slovakia at the end of September. Norway's Hydro owns a majority stake in the aluminum smelter.

Norsk Hydro said the move was in response to unfavorable conditions, including high electricity prices, which showed no signs of improving in the short term.

Heading into summer, benchmark electricity prices in Europe hit a record high on Tuesday as extreme heat pushed up European electricity demand. On Tuesday, electricity prices in Germany rose by nearly 4% in the next month. At one point, they rose by nearly 15% and exceeded 500 euros. In the next year, electricity prices rose by 3.7%, and they once rose by more than 10% and pushed up to 530 euros.

According to Norwegian Hydro, the smelter is currently operating at 60% of its annual capacity (175,000 tons), and if it continues to operate after 2022, the plant will incur huge losses.

London aluminium futures rose nearly 3% at one point after the shutdown was announced.

Due to soaring electricity prices in Europe, global zinc giant Nyrstar announced on Tuesday that it will close its Dutch Budel zinc smelter from September 1. International zinc prices jumped 6% and hit a two-month high.

In this regard, Nanhua Futures said that the news of Nyrsta's shutdown of its smelter has re-emerged the cost pressure of the European energy crisis on non-ferrous smelting, and the risk of production reduction by overseas aluminum plants has increased.

On the domestic front, Nanhua Futures pointed out that due to the shortage of electricity in high temperature days, the production reduction of electrolytic aluminum plants in Sichuan has further expanded compared with July. According to Baichuan Yingfu, the production has been reduced by about 360,000 tons, and there is still a possibility of 380,000 tons of production reduction in the future, accounting for a large proportion of the production capacity in Sichuan. According to Mysteel research, an alumina enterprise in Chongqing has actively responded to the call of the local policy of letting electricity to the people and implemented a complete shutdown, involving a production capacity of 800,000 tons per year.

CITIC Securities said that the overseas energy crisis combined with the sudden production reduction of domestic aluminum plants, the supply growth of the electrolytic aluminum industry has slowed down, and the situation of strong supply and weak demand is expected to improve.