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High natural gas prices to alter European industrial landscape

Oil&Gas Materials 7 December 2022 15:07 (UTC +04:00)
High natural gas prices to alter European industrial landscape
Laman Zeynalova
Laman Zeynalova
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BAKU, Azerbaijan, December 7. High natural gas prices are expected to alter the industrial landscape of European industries that are heavily reliant on natural gas with shuttered capacity unlikely to return after a second year of elevated prices, Trend reports Dec.7 with reference to Fitch Solutions.

“High natural gas prices are expected to remain below peak levels seen in 2022 but will remain well above historic averages. The high cost of natural gas, now running at over 20 months in duration, will alter the industrial landscape of European industries that are heavily reliant on natural gas with shuttered capacity unlikely to return after a second year of elevated prices. In addition, high raw material costs are adding to producer costs as commodities, including energy and metals are expected to see declines in prices but remain well above historic levels after strong gains in price in the post-Covid recovery,” reads a report released by Fitch Solutions.

The company analysts point out that under threat in Europe are those industries that are heavily reliant on plentiful and inexpensive natural gas in particular the petrochemical and fertilizer sector.

“The producer price index, a measure of the rate of change in prices of products sold, show that fertilizer manufacturers in Germany have been unable to raise prices in line with the rise in European natural gas prices. The inability to raise the prices of fertilizer to cover input costs in some facilities has seen output reduced or in some cases capacity shut-in. While now heading into the third year of elevated natural gas prices at six-to-eight times the historical average, we see the prospect of a permanent loss in capacity a growing threat to this key industry.”

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