(Bloomberg) -- Trimet Aluminium SE will ramp up production at its smelters in France and Germany to full capacity in the coming year, in a sign that falling energy prices are helping to bring the European aluminum industry back from the brink of an existential crisis. 

The continent’s aluminum sector was one of the worst-affected industries during the energy crisis, with more than half of regional capacity taken offline as power prices surged. The metal is one of the most energy-intensive to produce, and at the peak of the crisis the spot cost of buying the power needed to make aluminum in countries like France was more than five times higher than the price that smelters could collect selling metal. 

Now, the cost would account for about a quarter of the price, according to Bloomberg calculations based on spot prices and the typical amount of power needed to produce aluminum — which is about 40 times higher than is needed to make copper.  

Trimet — which has been running its plants in Germany and France at less than 50% of capacity over the past two years — said on Thursday it plans to ramp up to full capacity by mid-2025, targeting output of 540,000 tons per year. It secured a long-term power supply contract for its French plans with EDF last year, it said.  

“Relaxed conditions in procurement markets and, notably, decreased electricity prices have now made it economically viable to produce aluminum again,” the company, which is headquartered in Essen, Germany, said in a statement.

Power prices have retreated sharply from the highs seen during the worst energy crisis in decades. Benchmark German power has fallen 32% in the past year and are close to the five-year average. That coupled with stronger economic data from Germany is creating some optimism that energy demand will return.

Some aluminum smelters who are less exposed to spot power prices have already restarted capacity, and there have also been restarts in industries including zinc and steel. But the huge amounts of power needed by the aluminum sector — and heavy costs associated with curtailment and closure — have raised worries that regional production might never fully recover.

Aluminum prices fell 1% to $2,571.50 a ton the London Metal Exchange after the announcement, reversing earlier gains. Prices of the metal have rallied more than 8% this year as the outlook for demand starts to brighten following deep contractions in areas like construction. 

--With assistance from Rachel Morison.

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