Turkish electric arc furnace-based steelmakers have been told to limit crude steel production until 24 December after shutdowns at power and gas-fired plants and colder weather affected overall energy supply, Turkish steelmaking executives and market sources said today.
The mills have been asked to stop melting to balance power demand and supply, but some are still producing between from 21:00-08:00 local time (18:00-05:00 GMT), limiting the impact on the market steel and scrap markets. Turkish rolling mills can still operate.
An executive with a central and eastern European steelmaker said power's cost increase was "tragic" and could lead to higher offers when the market reopens in January. The mill will take down all of its downstream rolling operations, including hot-rolling, because of high power costs from 24 December-3 January.
Italian electric arc furnace-based steelmakers also were reportedly contemplating stoppages because of high power costs. There was talk that one flat-rolled mill was reducing production, although a source close to the company denied this, while longs mills were also discussing shutdowns. And some have already taken scheduled maintenance over the holiday period. A large European producer said it was "monitoring" the power situation. Given low apparent demand in recent months, the stoppages come at a timely moment for flat steel producers.
The German 2022 base-load power contract closed at €316/MWh on 21 December, up by €59.75/MWh on the day, on tight availability. It is not yet clear whether costlier power prices will affect German production, as the vast majority of German steel market participants have left for the Christmas holidays.
The potential impact of power cost increases was not factored into exchange CME Group's forward curve today. February and March traded today at €840/t and €830/t, down by €35/t and €45/t from settlements on 21 December.
