European metallurgical companies have expressed extreme concern about further increases in energy costs. Some market participants said that electricity costs have already exceeded 15% of the total cost of steel production. Electricity bills increased additional costs for steelmaking by 40-50 euros per tonne. Some steel mills believe that profits made during high steel prices will be "devoured" by energy bills.
Therefore, most European metallurgical plants are planning to raise prices for rolled metal in October or suspend production. Consumers of metal products still hope for additional volumes of steel from abroad, but given the import quotas, this seems unlikely.
Buyers believe that excuses about temporary increases in energy prices are just an excuse for steel mills to maintain high prices for rolled metal.
The sharp rise in electricity prices was associated with the rise in natural gas prices. China is in dire need of energy after the suspension of some coal purchases from Australia for political reasons. Redirecting energy flows to Asia's largest economy has caused electricity shortages in Europe.
