Nearly 50 industrial companies in Luxembourg are considered as electricity-intensive. How are they affected by rising energy prices?
The industrial sector with high consumption of electricity and gas is right to be concerned following recent explosions in energy prices, says René Winkin, Director of the Industrial Federation (FEDIL).
"This includes industries where metal is thermally processed or in the copper industry via electrolysis. Then we have mineral sectors such as glass and cement. In chemistry in particular, plastic is the most power-intensive."
Not all companies are exposed to the same price shock, as energy contracts are usually signed for the duration of one year. But there are also companies who purchase energy based on how much is needed. There is also a problem for those who are unable to pass on the additional cost to the customer, explains Winkin.
"For many years, electricity cost €40/MWh, gas between €15-€20/MWh. Two days ago, electricity cost €400, 10 times what we paid. Gas costs 12 times the amount."
Of course, fuel oil also plays an indirect role in the industry due to transportation. FEDIL suggests that state aid may be required.
"The state has an interest in a whole lot of industries remaining in production and not stopping because it is no longer profitable. We expect that in the next days concrete steps will be taken by the government."
In other respects too, the Ukraine war has had a direct impact because industrial projects in Russia and in Ukraine are now no longer viable. There is also an indirect impact; a lot of cables are produced in Russia and Ukraine.
Winkin: "If that leads to an automobile manufacturer throttling its production, as is the case with semiconductors, then companies here in Luxembourg are told to slow down."
"The high energy prices and the shortage of materials are not directly linked to the Ukraine war, but it has certainly exacerbated the situation," Winkin explained.
