An 85 per cent drop in domestic demand since the beginning of the crisis has left Greek steelmakers in shambles, while energy costs far higher than those faced by European competitors prevent the companies from being competitive internationally. Now one of the industry’s last hopes, legislation intended to bring down their energy bills, has been rejected by the troika.

Greece has traditionally punched above its weight in the production of steel, being competitive with major steel producing countries such as Germany and Britain. Nowadays though, due to the crisis, the sector has seen domestic demand fall by 85 per cent, while two of its top three steel companies are on the brink of closure and a third one has moved its HQ to Brussels.

Halyvourgiki S.A. has historically been one of the main steel producers in Greece and the second largest after Viohalco.

However, the blast furnaces at Halyvourgiki have fallen silent following the decision this week by the company to halt production and suspend 200 out of 263 workers at the plant located in the industrial area of Athens. This means that from this week until March 31 the majority of employees will stay home, receiving only 50 per cent of their salaries. This comes after months of attempts by the company to cut costs: 148 employees have already left their positions through voluntary retirement schemes, while salaries for those remaining have been cut by 20 per cent. The only staff that remain are those required to trade stock, guard the plant and perform administrative tasks.

Another steelmaker, Hellenic Halyvourgia, has also announced to worker representatives that it is seeking authorisation for mass layoffs from its Aspropyrgos plant which employs a total of 120 people. Hellenic Halyvourgiki has one plant in Aspropyrgos and another two in the port city of Volos in central Greece.

All this amounts to the latest serious blow to heavy industry in the country following falling production and mass layoffs in shipyards and the chemical and fertilizer industries.

The steelmaking industry has been left in shambles in part by a collapse in domestic demand as housing construction has ground to a halt.
Compounding the problem of low domestic demand is the high cost of energy which prevents the steelmaking plants from being competitive internationally. According to the financial daily Imerisia Online, steelmakers in Greece pay 77 euros per MWh of high voltage electricity and 104.4 euros per MWh of medium voltage current.

In Italy the equivalent prices are 30-35 euros, in Germany 35-30 euros, in France 40-46 euros and Bulgaria 46 euros per MWh.

In the face of these problems Greek steelmakers have attempted to keep blast furnaces running by operating at night when energy is cheaper and through exports sold below cost, which have saddled the steel companies with over 600 million euros in losses.

The hope was that the companies would survive long enough for the government to pass a so-called ‘cut off’ measure, that is legislation that would allow the Independent Power Transmission Operator to sign special contracts with large electricity users under which the operator would reserve the right to cut off the users at times of high loads in exchange for electricity discounted by up to 25 per cent.

But those hopes were dashed when the European Commission recently rejected as illegal the draft legislation drawn up by the Environment Ministry, as it deemed the discounts would amount to government subsidies.

The failure over the ‘cut-off’ measure appears to have been the final blow for Halyvourgiki and Hellenic Halyvourgia.

The Greek government, though, intends to amend its legislation, in order to placate the European Commission and the troika and plans to proceed in defiance of the Commission’s protests.

Germany has already unilaterally decided to protect its own steel makers from high energy costs in 2014 by exempting them from green energy taxes worth 5.1 billion euros, despite the European Commission having launched an investigation into whether a similar move last year amounted to a government subsidy.

Aside from electricity, Greek steelmakers also face higher costs for natural gas than other European Union countries. It is believed that Greece delayed at least a year in commencing negotiations with the Russian natural gas supplier, Gazprom, compared to other European countries, ostensibly because of the planned privatisation of the state-owned natural gas company – a privatisation effort which collapsed. This ultimately left Greek steelmakers paying 20 per cent more for gas than their European counterparts.
Source: thepressproject