Trimet Aluminium SE is set to boost production at its smelters in France and Germany to full capacity over the next year, signalling a recovery for the European aluminium industry amid declining energy costs.
During the energy crisis, the continent's aluminium sector faced severe challenges, with over half its capacity shuttered due to soaring power prices. As one of the most energy-intensive metals to produce, the electricity cost during the crisis's peak in countries like France was more than five times higher than what smelters could earn from selling aluminium.
According to Bloomberg calculations, the cost would make up approximately 25 per cent of the price, considering spot prices and the usual power requirements for aluminium production, which are about 40 times higher than those for copper production.
On May 16, 2024, Trimet announced plans to increase production to full capacity by mid-2025, aiming for an annual output of 540,000 tonnes. The company has been operating its German and French facilities at less than half their capacity for the past two years. In 2023, it took a significant step towards ensuring stable operations by securing a long-term power supply agreement for its French operations with EDF.
Trimet Aluminium SE said, "Relaxed conditions in procurement markets and, notably, decreased electricity prices have made it economically viable to produce aluminium again."
Power prices have significantly declined from their peak levels observed during the recent severe energy crisis. For instance, benchmark German power has dropped by 32 per cent over the past year and is now nearing the five-year average. This, alongside positive economic indicators from Germany, fosters optimism regarding a potential resurgence in energy demand.
Certain aluminium smelters, less affected by spot power prices, have resumed operations, with similar restarts observed in industries such as zinc and steel. However, concerns persist regarding the substantial power requirements of the aluminium sector and the considerable costs associated with curtailing or closing operations, raising doubts about the full recovery of regional production.
To gain deeper insights into European aluminium production and the anticipated trends for 2024, access your copy of AL Circle's industry-focused report "Global Aluminium Industry Outlook 2024".
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