French smelter Aluminium Dunkerque plans to reduce output by 20% in response to increased power costs, a source close to the plant told S&P Global Commodity Insights Sept. 6.
The curtailment will see the idling of 54 out of 264 pots, through to the end of the first quarter of 2023, at which point the group will "ramp up for Q2 and Q3", the source said.
The facility, with a capacity of 284,000 mt/year, implemented similar curtailments in Q4 2021 in response to increased input costs.
French year-ahead baseload power contracts peaked on Aug. 26 at Eur1,130.00/MWh ($1,120/MWh), more than double levels seen at the start of the month. By Sept. 5 the contract's value had fallen to Eur625.44/MWh, EEX data showed.
"Our consumption of electricity is huge. It takes about 13 MWh to make 1 mt of aluminum," the source said. "We are better to reduce production as soon as possible according to part of our [energy] contract."
The company did not respond to a request for comment.
"Customers are facing similar issues, but they do not source as much power as we do," the source said.
The LME aluminum cash daily price closed at $2,290.25/mt on Sept. 5, its lowest since April 13, 2021, which market sources attributed to weaker demand.
"It is obvious all smelters are faced with the same concerns," the source close to the plant said.
Norsk Hydro adjusts production
Meanwhile, a Norsk Hydro spokesperson told S&P Global the company had decided to keep smelting pots at its Husnes and Karmoey plants in Norway offline after normal maintenance to "adjust production to lower demand for aluminum".
"Note that this is a small amount, affecting a few ten thousand tonnes annually of a total production of more than a 1 million mt of primary aluminum in Norway," the spokesperson said.
"Normally, capacity adjustments happen all the time and is done at re-melters, which easily can adjust capacity," he said.
"With current power prices, the toolbox for capacity adjustments is different and we do this by postponing restart of pots that have been out for regular maintenance," he said, adding the pots would be brought back when the market situation justified it.
That came after Hydro stopped production at its Slovalco smelter in Slovakia.
Several other aluminum producers in Europe have been reducing output or halting production at smelters due to high energy costs, including shutdowns at Alro's alumina facility in Romania and Damco Aluminum Delfzijl Cooperatie's (Aldel) Farmsum plant in the Netherlands.
There has also been a 33% curtailment at Alcoa's Lista smelter in Norway, as well as reduced output at Alcoa's San Ciprian alumina refinery in Spain.
In August, Speira said it was considering cutting output further at its 160,000 mt/day Rheinwerk aluminum smelter in Germany, which had been operating at a rate of 140,000 mt/day, because of high power costs.
EU energy ministers agreed July 26 to voluntarily reduce gas demand by 15% from Aug. 1 to March 31, 2023, but with potential exemptions for member states if the cuts were made mandatory under emergency conditions.
The European Aluminium Association welcomed the plan, but said cutting off gas supply to its sector would have a significant economic impact.