European steel companies are cutting production due to high energy prices, warning they risk mass plant closures in a sector that employs more than 300,000 people and contributes tens of billions of euros to the region’s economy, Reuters and news.ro reported.

Despite four wind turbines and more than 50,000 solar panels at its headquarters in eastern Belgium, stainless steel manufacturer Aperam has been forced to halt production due to rising energy prices.

The company now pays for electricity per month what it used to pay per year, and has retired a facility that typically melted stainless steel scrap into giant slabs and employs about 300 workers.

“We have temporary levers to overcome a certain period, but it cannot last for years. If that (happens), we will see sectors like ours deindustrialize and Europe will become dependent on imports of base metals like ours,” Aperam’s European chief Bernard Hallemans told Reuters.

Summer maintenance usually limits production to about 80% of capacity, but Hallemans says the percentage has been around 50% since late June after Russia sharply cut gas supplies to Europe, pushing already high prices to new records.

European imports, mainly from Asia, where energy prices are much lower but the carbon footprint is higher, rose from 20-25% in 2020 and 2021 to 40% this year, peaking at around 50% in recent weeks.

Hallemans says Europe must provide answers.

According to a McKinsey report last year, steel contributes an estimated €83 billion ($80.97 billion) of direct value added to the region’s economy, directly employing 330,000 people.

The European Commission says EU trade protection measures have protected 195,000 steel jobs in 2021, although critics say the gap in energy costs is now so wide that imports could be cheaper even with additional protective tariffs.

On the energy front, the European Union failed to agree on a gas price ceiling, but supported a plan to distribute excess revenue from energy producers to consumers.

Hallemans says it’s unclear what payments producers like Aperam might receive, and it could be months away, and energy prices are rising sharply as Aperam tries to win customers with annual contracts.

In Germany, which depends heavily on Russian gas to power its export-dependent economy, the steel industry faces additional energy costs of 10 billion euros, about a quarter of the industry’s average annual turnover, with the added costs of the EU’s environmental transition.

“If we don’t pull the trigger now, we face a winter of deindustrialization in Germany,” said WV Stahl president Hans Jürgen Kerkhoff.

ThyssenKrupp Steel Europe has cut production there as customers decry the recession and energy prices threatening its international competitiveness.

ArcelorMittal, the world’s second-largest steelmaker, has closed a furnace in Germany, as well as others in France, Poland and Spain, and expects its production in Europe to be about 17% lower in the fourth quarter than a year earlier.

Adolfo Aiello, deputy director of the European steel federation Eurofer, says that if the energy crisis is not resolved in the short term, temporary shutdowns could become more permanent, affecting other energy-consuming sectors such as other metals, fertilizers and chemicals.

Eurofer says the situation has worsened significantly since its August forecast of a moderate fall in European steel consumption of 1.7% this year, followed by a rebound of 5.6% in 2023.

The Fed’s next quarterly forecast is not due until the end of October, but director of economic research Alessandro Schiamarelli says the recession in 2022 will be deeper than the current forecast, and a contraction will also be seen in 2023.

“The events of the last two months have completely disrupted the picture,” he said.

1,200 employees at the Aperam plant in Genk are at risk of being temporarily out of a job as wages are cut by at least a fifth as inflation reaches 10%.

The factory has already experienced temporary shutdowns, in particular during the global financial crisis of 2008-2009.