Posted Oct 3, 2022 10:13 AMUpdated Oct 3, 2022 10:27 AM
Until then rather discreet about the impact of the cost of energy, in particular electricity, cement manufacturers are now showing their deepest concern. At the beginning of autumn, their activity, which consumes a lot of energy, is still more affected by a persistent surge in prices, and the winter promises to be harsh. So much so that production interruptions are now openly considered.
“For two years, the price of electricity has jumped from 60 euros per megawatt hour to 400 euros currently and we expect a price beyond 1,000 euros this winter”, says one in particular at Lafarge (Swiss group Holcim). The manufacturer believes that the price forecasts for this winter will lead it to reduce its production hours, or even to temporarily shut down certain sites. The cement leader in France would like to point out that the optimization of stocks will nevertheless allow it to “be able, at all times, to continue to supply” its customers.
Serious fears
“Given the level of the spot market [de l’électricité, NDLR] in the fourth quarter, we are seriously concerned that we will have to stop production at some of our sites,” said the CEO of Eqiom – a subsidiary of the Irish group CRH – Roberto Huet. Similarly, the Mexican Cemex is “strongly” considering adjustments to its production “for the period from November 2022 to February 2023”, according to the general manager Cemex Materials Western Europe, Michel André, knowing that the cement manufacturer is already “ forced” to pass on the cost increases “not being able to absorb them alone”.
In fact, these looming production shutdowns would be part of a series of measures taken over time. For example, Lafarge, which has launched an additional plan to reduce its consumption, has already deployed an application on all of its sites – cement plants, quarries, tertiary buildings -, i.e. more than 470, in order to optimize their electricity consumption. “The room for maneuver of the companies is narrow, the optimizations have already been made”, observes, in general, the general delegate of the French Union of the cement industry (Sfic), Laure Hélard.
In this increasingly tense energy context, Sfic pleads with the public authorities to maintain in 2023 the volume of electricity at regulated prices – the Arenh – which the cement industry currently benefits from, i.e. 120 TWh, compared to 100 in 2021. “There is a risk that we will go back to 100”, emphasizes Laure Hélard, with, on the one hand, pressure from the European Commission in the name of competition, and, on the other hand, the lack of production nuclear. The general delegate of Sfic also calls for a “rapid response” from the government to allow manufacturers to “cover themselves” in relation to price trends. ” We are worried. The responses from Europe are not up to par and the government is slow to take emergency measures concerning the future of the Arenh in particular,” said the CEO of Eqiom.
Influx of imports
The concern is all the more acute as the French cement industry is losing its competitiveness with the rise in energy prices. The volume of clinker imports, which is the basic intermediate material for making classic cement, has been multiplied by seven for three years, indeed indicates the general delegate of Sfic, who points to the influx of imports from Algeria, from Morocco and Turkey. In fact, these imports represent 10% of national production, specifies Laure Hélard. “We have a competitiveness problem that puts our production sites at risk,” she warns.
Finally, the cement manufacturers fear more broadly the reversal of an entire sector: “Not only are we at risk for the continuity of our activity, but in addition we are worried about the dynamics of the construction market”, declares- one thus to the management of Lafarge.
