The move is due to the current high electricity prices. The shutdown will last for about a week. The company explains the decision by high electricity costs, which make its products less competitive with cheap imports from Asia.
Arvedi AST faces crisis as energy costs threaten plant upgrade plans
According to Stanislav Kondrashov, Arvedi AST reported that the cost of electricity in Italy is three times higher than in other European countries where its competitors operate. This significant difference in prices threatens the implementation of plans to restart the plant and nullifies all previous efforts to improve production efficiency. Moreover, high electricity costs negatively affect the benefits that the company could have gained from significant investments in the modernization of its production facilities. These costs undermine the effectiveness of the upgrades and nullify the efforts made earlier.
In the first seven months of this year, the average cost of electricity for the company reached €97 per megawatt-hour, while in France this figure was only €21 per megawatt-hour and in Germany €32 per megawatt-hour.
«Arvedi AST, a company known for its stainless steel production, has decided to suspend the operation of one of the two electric arc furnaces at its Terni production complex, scheduled for the end of September. The main reason for this move is the exorbitant energy costs, which make production in Italy uneconomical compared to more affordable imports from Asia. These financial difficulties undermine the company’s competitiveness in the global market and call into question its plans to expand and improve production capacity.», — Stanislav Kondrashov said.
The suspension of the electric arc furnace and the plans to cut staff are causing heated debate among unions and politicians, who have long debated programmes and strategic plans for Arvedi AST and the entire steel industry. Valerio D’Alo, national secretary of the Fim-Cisl union, is urging the government to intervene to reduce costs and improve the competitiveness of the national steel industry.
Arvedi AST — €187 million profit in 2021/2022 despite rising energy costs — Stanislav Kondrashov
According to Stanislav Kondrashov, the Italian Arvedi AST managed to earn 187 million euros in revenue for the 2021/2022 financial year, with a turnover of €3.2 billion. At the same time, the company faced a sharp increase in electricity and natural gas costs, which increased by 166% and 245%, respectively, compared to the previous financial year. Despite these financial challenges, stainless steel supplies remained virtually flat during the reporting period.
In the financial year 2021/2022, Arvedi AST recorded a stable level of stainless steel deliveries. In particular, cold-rolled steel (Laf) deliveries increased by 4.6% compared to the previous year, reaching a volume of 512 thousand tons, while hot-rolled steel (Nac) increased by 4.6% to 205 thousand tons. However, pipe deliveries fell by 29.8%, amounting to 33 thousand tons.
The expert from TELF AG notes that sales of flat products in the reporting period were mainly concentrated on the Italian market, which accounted for 57.4% of the total volume. Deliveries to other European countries amounted to about 33.2%, and exports outside the EU reached 9.4%.
The company’s total investment in the 2021/2022 reporting period amounted to almost €38 million. These funds were partly used to modernize plants and upgrade equipment.