Spain's electric steel mills cut output amid soaring power prices - Reuters

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MADRID, March 10 (Reuters) - Spanish steel makers have cut output at their electric-powered mills after power prices skyrocketed to record highs following Russia's invasion of Ukraine.

Andres Barcelo, the general director of national steel producers' association UNESID, told Reuters on Thursday that the steel mills halted production on the afternoon of March 8.

Since then, many have been producing at a reduced rate to lower costs, UNESID and some local steel producers said.

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Electricity costs have surged in tandem with gas prices following Russia's invasion of Ukraine, creating a headache for power-intensive industries like steel, as producers are unable to transfer all the increase in costs to their customers.

Wary of signing long-term contracts with utilities, which would lock in current high prices, steel makers have resorted to buying electricity on the spot market where prices are at record highs, a spokesperson for ArcelorMittal (MT.LU) said.

As a result, ArcelorMittal has stopped operating during peak hours, or about one third of the time, at its Olaberria plant in the Basque Country, the spokesperson said.

The company will also extend a scheduled closure of another plant in nearby Sestao for 10 days until March 23, and plans to close a third plant in Gijon, in Asturias, between March 24 and 28.

Spanish stainless steel maker Acerinox (ACX.MC) said it had halted production at its only plant in Spain, in Algeciras at the southern tip of the country, while privately held producer Celsa, whose Barcelona mill has an annual capacity of 2.5 million tons, also cut output, citing unbearable energy costs.

"We are meeting the demands of our customers but our furnaces are operating at different hours to adapt to electricity prices," a Celsa spokesperson said.

Other privately held steel makers such as Megasa and Siderurgica Balboa also halted output at least in part.

To protect steel makers, UNESID has asked the government to change regulations to decouple electricity from international gas prices.

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Reporting by Christina Thykjaer and Inti Landauro Editing by Nathan Allen and Mark Potter

Our Standards: The Thomson Reuters Trust Principles.

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