Gas consumption plummets 32% in the industry due to closures and production stoppages

The industry has been the first sector to fall into this domino effect that, according to the analysis houses, can lead to a recession in Spain. The closures and stoppages of production are propagated by the energy crisis and a shortage of raw materials that continues forever. A crisis that can drag down the rest of the sectors and that, according to the business world, will worsen in the coming months. The latest indicators paint a gloomy picture. Gas consumption plummeted 31.8% during the month of July in the sector, reflecting a significant deterioration in manufacturing activity. During the first seven months of the year, the drop in consumption stood at 14.7% compared to the same period in 2021. Regarding demand, in July it was almost 20% below what was forecast in the lowest scenario , as explained by the employers of SMEs, Cepyme. The organization warns that this data reflects "that the deterioration in activity may be much more pronounced and rapid than expected in recent months." Faced with this situation, companies have already begun to take measures, such as adjusting their schedules in the face of rising energy prices, restructuring their production plans, even with partial or total temporary closures of part of their chains, and adjusting ' stock'. But these patches are already beginning to unravel due to the reality of costs in energy-intensive sectors. "Unfortunately, this problem affects a growing number of sectors and companies and the support of the authorities is required to safeguard the Spanish productive fabric," they explain from Cepyme. The situation is defined by the electro-intensive industry as "critical". The sector has seen how the cost of electricity has quintupled in just a year and a half and there have been dozens of plant stoppages since the last quarter of 2021. A brake on production that will continue in the coming months, especially in the sector steel, which employs 21,000 people in Spain, according to Unesid. ArcelorMittal will shut down a blast furnace in Asturias at the end of the month, while Ferroatlántica has already halted its activity for an indefinite period at the Boo factory (Cantabria). Sources from the sector explain that the multinationals in the sector decide to carry out the stoppages based on the degree of competitiveness of each oven at a European level and distribute the workloads among those where they can obtain more profitability. Agreements with unions These are not the only bizarre measures that steel and metallurgical companies have had to take to adapt to the context of high energy prices. Many factories had adapted their production to night hours to take advantage of the cheaper hours of the day. But the tariff chaos is now causing the activity of the ovens to be carried out in the central hours of the day, between 12 and 6 in the afternoon. This forces companies to have to reach new agreements with the unions "because with these prices you have to work at the most profitable hours," Fernando Soto, director of the Association of Companies with Large Energy Consumption ( AEGE). The employers' association that encompasses the metallurgical, chemical, iron and steel and industrial gas sectors, those for which the price of electricity accounts for up to half of their costs. But for Soto, electricity prices are far from the only threat to the future of electro-intensive companies. The manager puts the focus on the uncertainty that exists at the moment with the demand for the evolution of inflation. "Many companies are repositioning their orders and are now thinking twice about making a medium- and long-term contract." This is especially the case in the automotive industry, where they also accuse the lack of semiconductors, which also causes production stoppages in some factories in the sector. Which translates into less manufacturing and therefore fewer orders for steel and metal companies. And as an addition, "we have non-EU steel imports that many of them do not comply with environmental regulations that are not required here," denounces Soto. A factor that weakens industries and causes excess supply in the markets. Meeting with the Government To find solutions to avoid disaster in winter, the steel sector, together with the rest of the associations that make up the Alliance for the Competitiveness of Spanish Industry, met yesterday with the ministers Ribera and Maroto to agree on measures that will serve as an ointment for the sector as a whole and are included in the Contingency Plan that the Executive must send to the European Commission this month. The representatives of the automotive, paper, food or cement sectors presented a list of urgent measures to the heads of Ecological and Industry Transition, including the modification of the functioning of the European electricity market; the adoption of measures to guarantee that all contracts signed by industrial consumers before April 26 of this year have energy contracted in a term with fixed prices are exempt from the cost of the Iberian mechanism; the immediate activation of aid lines for energy demand, allocating up to 2, 25 or 50 million euros per industry, or the need to ensure the continuity of industrial activity that has a firm gas supply, among others. Related News standard No Pamesa closes one of its main atomized clay producers due to the high price of DV gas Azuliber announces the total cessation of its activity and the start of an ERTE for productive and organizational reasons After the meeting, the Minister of Industry, Reyes Maroto , described these requests as "useful" for the preparation of the contingency plan after acknowledging the key role of the electro-intensive industry, commerce and tourism "in promoting the most intelligent possible use of energy and the increase in savings and efficiency". Meanwhile, the rest of the economic world holds its breath in the face of this slowdown. From Cepyme they explain that the crisis in the industry is a "good guide" to what can happen in other sectors, since cost increases are widespread and now a good number of companies are beginning to renew their energy contracts at much higher prices those who had agreed. Added to this is the fact that the wave of inflation puts pressure on consumers' purchasing power, which is already experiencing a drop in the order book.

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