A report created by the Centre for European Policy Studies (CEPS) on behalf of the European Commission, analyses EU regulations in the context of the aluminium market and also describes the industry’s economics, strategic importance and close links to many downstream industrial sectors.

Demand for aluminium in the EU has recovered well since the onset of the crisis and the report reveals in no uncertain terms that with the right policy mix the aluminium industry could have a bright future in Europe. But the report reveals that the current EU regulatory burden can have a negative impact on the industry’s international competitiveness. At the same time the cost deriving from EU rules is not the sole cause of the loss of competitiveness of the aluminium industry in the EU.

The report concludes that it is possible to produce aluminium at competitive level in the EU, but primary aluminium producers that buy electricity in the current market are at risk of not being competitive since today’s electricity prices would reduce their margins to an unsustainable level. Moreover, for some companies the existing long-term energy contracts will expire in the coming years, these producers will have to buy electricity on the market at spot prices.

Three main conclusions can be drawn from the cumulative cost impact: cumulative regulatory costs are high, ranging from €114 to €149 per tonne; electricity is one of the key factors affecting the competitiveness of the EU primary aluminium industry, as it represents over a third of total production costs; the regulatory burden imposed on producers has a major impact on their relative performance.

Leave a Reply

Your email address will not be published. Required fields are marked *