The energy-intensive steel industry is increasingly worried about the sharp rise in electricity costs.

The Lech steelworks in Meitingen, Bavaria, was one of the first plants in Germany to stop production.

"We shut down production on a daily basis," said a company spokesman on Thursday.

"It doesn't make economic sense to produce it." According to the company, the electric steelworks produces more than a million tons of the material every year.

The power consumption corresponds to that of a city with around 300,000 inhabitants.

Including subsidiaries, more than 1000 people are employed at the site.

It is the only steelworks in Bavaria.

"Electricity and gas prices had already risen dramatically in the months before the Russian attack on Ukraine and they had almost tripled compared to the beginning of 2021," said the steel trade association when asked by the Reuters news agency.

The reasons were the effects of the Corona crisis, weather conditions, drastically increased CO2 prices, but also the geopolitical tensions.

War as a price driver

"It is with great concern that we see that the cost increase due to the outbreak of war will accelerate further." The steel industry is massively affected by the effects on energy prices.

"This applies in particular to the electricity-intensive processes such as electric steel production, but also to the use of natural gas in further processing."

Electric steelworks that melt scrap consume significantly more electricity than classic blast furnaces that use iron ore and coking coal.

The gases produced can be used to produce electricity, which covers a large part of the demand.

Thyssenkrupp Steel Europe even supplies several thousand neighboring households at the Duisburg site.

But Thyssenkrupp Steel is also feeling the effects of the high prices.

"In the last six months alone, our expenditure on gas and electricity has increased by a three-digit million amount," said the head of Thyssenkrupp Steel Europe, Bernhard Osburg, in the middle of last month.

Thyssenkrupp has the advantage of producing two-thirds of the electricity it needs itself through processes at the Duisburg steel site.

However, the remaining third alone leads to these additional costs.

The second largest German steel manufacturer, Salzgitter, operates an electric steelworks in Peine.

The system's flexibility is used here to avoid electricity price peaks, a spokesman said.

Electricity prices are closely monitored and shifts are taken out if prices are too high.

This was the case around Wednesday.

World market leader ArcelorMittal reacted similarly.

The electric steelworks in Germany, Luxembourg, Poland, Romania and Spain ran in stop-and-go mode.

The price explosion for electricity causes considerable additional costs.