Prices Could Rise Further As Big Dutch Zinc Producers Cut Output Due To Surging Electricity Prices

Europe's energy crisis has started to spread across industries, with Nyrstar's large zinc smelter in the Netherlands having to cut production at peak times because of soaring electricity costs. Zinc futures in London rose 2.15% to $3,090.50 a tonne on Thursday after the news.

Henk Leendertse, Nyrstar's general manager, said the company was cutting production at its Budel-Dorplein plant in the Netherlands because of a fourfold increase in electricity prices over the past year.

The surge in European power costs over the past year has far outstripped the rebound in industrial metals markets. Even with metals prices near multi-year highs, some producers are still Mired in losses as costs soar.

"We've hedged some of our electricity consumption, which helps, but it's just a matter of time," Lindsey said. "If we want to hedge our risk for next year, electricity prices are already very high, so it's just delaying the impact."

Before the cuts, the zinc smelter was producing about 300, 000 tonnes a year, Mr Lindsey said, although he declined to quantify the impact.

Nyrstar,托克旗下大宗商品贸易r, operates three smelters in Europe and also has operations in Australia and the US. Mr Lindsey said the company's plants in France and Belgium were operating normally because of lower electricity costs in those countries.

The Badel-Dorplein plant accounts for about 1% of the Netherlands' electricity consumption, and it takes 3.8 megawatt hours to produce a tonne of zinc.

Nyrstar is discussing potential aid with the Dutch government. However, the Budel-Dorplein plant is at a disadvantage compared with other SMELters in the EU because the Netherlands has not confirmed that it will continue to offer offsets related to carbon emissions, which are available elsewhere in the EU.

The recent surge in European gas and power prices has supported industrial metals prices, but production margins are also under pressure.

StoneX Group, a hedge fund, thinks metals prices could rise further. "The next question is: when are downstream buyers going to realise that zinc is actually cheap at current levels?" Michael Cuoco, head of metals and bulk materials sales at StoneX Group, said recently.