for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up

UPDATE 2-Steelmaker Lech-Stahlwerke halts production as power prices soar

* Steelmakers cut, halt production across Europe

* Energy prices are rising on fears around Russian supplies

* Price rise is accelerated by war in Ukraine -German steelmakers (Adds comment by Lech-Stahlwerke management member)

MEITINGEN, Germany, March 10 (Reuters) - A spike in electricity prices has forced small German steelmaker Lech-Stahlwerke to halt production at its plant in Bavaria, the German state’s only steel works, in the latest sign of how Moscow’s invasion of Ukraine is impacting Europe’s economy.

“At the moment we of course have problems with price developments, which means that energy costs are rising immeasurably,” Thomas Friedrich, member of Lech-Stahlwerke’s management, told Reuters TV.

“In some cases, energy prices are ten times higher than last year. The price of scrap is also going up. Scrap is our input material for steel production, and we also have to pay significantly more for it.”

Lech-Stahlwerke’s plant in Meitingen produces about 1 million tonnes of steel per year and its electricity consumption is equivalent to that of a city with a population of roughly 300,000.

Like chemicals or cement production, steelmaking is among the most energy-intensive industrial processes and Lech-Stahlwerke’s move comes as energy prices have soared on fears gas supply out of Russia could be cut.

“We are observing with great concern that the rise in costs is being accelerated further by the outbreak of the war,” Germany’s Steel Federation said, adding this was felt most in the production of electrical steel.

Salzgitter, Germany’s second-largest steelmaker, is adjusting production at its electrical steel plant in Peine to avoid price spikes, it said.

Larger peer Thyssenkrupp, meanwhile, said last month that higher power and gas prices had led to additional costs of at least 100 million euros ($111 million) over the past six months.

ArcelorMittal, the world’s largest steelmaker, earlier cut production in Spain in response to higher prices.

It said it has been operating its electric arc furnaces in Germany, Luxembourg, Poland, Romania and Spain in a stop-start mode for months “to avoid peak electricity prices that would significantly impact our ability to remain competitive.” ($1 = 0.9015 euro) (Reporting by Tom Kaeckenhoff in Duesseldorf and Ayhan Uyanik and Louisa Off in Meitingen Writing by Christoph Steitz Editing by Madeline Chambers, Alexandra Hudson and Matthew Lewis)

for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up