Romanian Aluminium Giant Alro Relies On Spot Power Market
Romania Insider reported that Romania's biggest electricity consume, aluminium maker Alro, must cover some 30% of its consumption through purchases on the spot market after several suppliers terminated their contracts. Rising prices on the spot market have, on the one hand, forced the suppliers to terminate their contracts since presumably they were not covered by long-term contracts with producers for the amounts sold in advance to Alro but also leaves Alro exposed to higher production costs.
Alro Chairman Marian Năstase told Financial Intelligence last month “There are many bubbles in the energy market. Last year, electricity was sold short. Last year during pandemic, the price in day-the ahead-market (DAM, the spot market) was very low, and everyone thought it would be even lower. They sold energy on the market under long-term contracts without having it, based on assumptions that they will buy cheaper in DAM next year. But the price in the DAM has risen, among other things, because of the decarbonisation steps. When the delivery deadline came, the one who had to deliver the energy preferred to break the contract than buy from DAM. And the bubble burst."