Divisional supplies of energy and other raw materials
In the Fiber and Pulp divisions, energy and other raw materials are significant factors influencing the Lenzing Group’s financial position and performance.
Energy
With its biorefinery concept at its Lenzing, Paskov, and Indianópolis sites, Lenzing is one of the pioneers of fiber and pulp production that is as self-sufficient in energy as possible, and is continuously working to enhance energy efficiency at all its production sites.
Energy reserves at the Lenzing Group’s European sites remain very well filled in light of the geopolitical situation and associated uncertainties.
Energy prices in Europe continued to fall in 2024, thereby continuing their normalization, although a renewed rise occurred towards the end of the year. Continued low levels of gas consumption in Europe and the associated low level of imports led to a 15 percent reduction in gas prices. The price of electricity even decreased by as much as 20 percent thanks to the high level of production of renewable energies. The price of coal was down by 10 percent and the oil price decreased by 3 percent. The carbon dioxide price reduced by 22 percent.
The Lenzing Group partially restructured its energy price hedging in 2023 in the wake of the supply crisis and thereby reduced its exposure to the risk of price changes. Natural gas and electricity are now procured in accordance with a defined purchasing strategy, under which part of the energy required is procured via fixed supply contracts with fixed prices on the forward market. For this reason, spot market trends exert only a weakened impact on the company’s energy costs.
In November 2023, Lenzing signed a supply contract with Austrian electricity producer WLK energy for the purchase of around 13 MW of wind power. The plant was constructed in 2024 and has been supplying green electricity for the Lenzing site since 2025. In addition, Lenzing is planning (subject to official approval) to expand its PV capacities for the site, thereby not only underscoring its commitment to the energy transition, but also realizing a long-term investment in diversified electricity supplies that offer stable prices. At present, the site procures electricity from PV systems with a total output of 7 MWp.
In 2024, an environmental impact assessment was successfully conducted for the construction and operation of a new fluidized bed boiler system at the Lenzing site. This project aims to replace the old system, minimize the use of traditional fossil fuels, and improve air quality. Construction is scheduled to begin in mid-2025.
The energy plants at the Lenzing site were mainly in normal operation during the reporting period. A number of energy efficiency measures were implemented in the reporting year, which not only lead to considerable savings, but also make an important contribution to climate change mitigation, resource conservation, and competitiveness.
The power plants in Paskov also operated normally during the reporting period. Surplus energy was fed into the public power grid.
Natural gas prices at the site in Mobile, USA, changed only slightly compared to the previous year. The electricity price posted a slight increase.
The plants in Purwakarta, Indonesia, were operated with a high level of availability and were further optimized. No significant change occurred to the coal price compared to the previous year. Lenzing has been sourcing green electricity from renewable sources at its Indonesian site since the third quarter of the previous year. The electricity price decreased further year-on-year.
Steam and electricity prices at the site in Nanjing, China, continued to fall compared to the previous year. With the commissioning of two gas turbines, a further milestone was reached in the reporting year in the conversion of energy supplies from coal to natural gas with the aim of reducing carbon emissions.
Steam and electricity prices for the lyocell plant in Prachinburi, Thailand, were down year-on-year.
Other raw materials
The chemicals markets relevant to Lenzing recorded moderate price increases in 2024 compared to the end of 2023, partly due to the continued rise in energy costs on the manufacturer side.
Caustic soda
Caustic soda is used in the production of dissolving wood pulp and is also an important primary product for the production of viscose and modal fibers. It arises as a byproduct from chlorine production. Caustic soda prices recorded a moderate trend in the first few months of 2024, but rose continuously in all regions in the second half of the year. This was due to relatively stable demand from nickel and aluminum production, coupled with a shortage of supply due to diminishing demand for chlorine.
Sulfur
Sulfur is an important starting material for the production of carbon disulfide and sulfuric acid. In turn, both raw materials are used in the viscose process. Sulfur prices were stable in the first half of 2024, but recorded a significant increase towards the year-end due to the strong growth in demand for sulphuric acid and fertilizers.