ArcelorMittal introduces energy surcharge on EU longs

ArcelorMittal is implementing a €50/t surcharge on long products in Europe to help pass off rising energy costs, the company said in a customer note obtained by Argus.

The company said electricity and natural gas cost increases have added €120/t to the cost of steel production, while suppliers of ferro-alloys and limestone are also asking for surcharges, which will heighten the cost burden. Some market sources agree that costs have risen by this much for electric-arc furnace mills. The UK's blast furnace-based Tata Steel recently told its customers that its costs have risen by about £30/t.

Other European longs producers, such as Celsa, have also tried to impose surcharges in recent days. In the UK, Liberty Steel is expected to follow suit in its speciality steels business.

"Considering the magnitude of these increases, it is no longer possible for ArcelorMittal to continue to absorb these costs alone," the ArcelorMittal note says.

The surcharge will be withdrawn as soon as energy prices normalise, it says. The company also cited rising costs of carbon emissions allowances, which it said have increased from €33/t at the start of this year. Prompt allowances are trading at just less than €60/t, according to Argus data.

In the UK, the Energy Intensive Users Group, which represents manufacturers of steel as well as other materials, said cost containment measures need to be introduced on gas, electricity and carbon prices to ensure producers can continue operations. It also said energy regulator Ofgem must replicate the network tariffs discounts offered to competitor industries in the EU.

By Colin Richardson