Germany’s mills are facing additional costs of half a billion euros ($511 million) brought by the gas procurement neutrality charge that is to cushion revenue losses for importers of Russian gas.

German gas market regulation body Trading Hub Europe (THE) issued on Monday the gas procurement neutrality charge defined in cooperation with the government. Awaited anxiously by manufacturing industries, the amount was set at 2.4 cent per kWh, and will be charged from 1 October.

The charge is to support gas importers directly affected by a significant reduction of gas import volume and therefore aims to maintain stability of the existing gas supply system, THE explains. “For steelmakers, the gas procurement neutrality charge will aggravate the cost pressure that has already worsened from continuous price increases,” German steel federation WV Stahl said in a statement issued on Monday.

The price hikes for energy are already causing extra costs of €7 billion this year, compared with 2021, and the procurement neutrality charge will come on top of this, Kallanish learns from the federation. “The government urgently must show ways to limit new costs arising from the charge,” warns WV Stahl president Hans Jürgen Kerkhoff.

Natural gas in steel production is used to generate process heat, and for that purpose cannot easily be replaced. Germany’s steelmakers use around 2 billion cubic metres of gas per year, which corresponds with the consumption of all private households in Berlin and Munich combined. Germany’s total consumption of natural gas in recent years was mostly above 80 billion m3 per year.