Europe's Heavy Industry Calls For Help

Europe's chemical, steel and cement industries have issued an urgent call to the European Commission (EC) to cap the price of gas in order to prevent more plant closures.

Organizations including CEFIC, CEMBUREAU, EULA, CEPI, EUROFER and Fertilisers Europe, have called on President of the European Commission Ursula Van de Leyen to act immediately to cap gas prices and implement measures to disconnect electricity prices from gas prices. In recent weeks, Industrial Info has been tracking closures of plants and smelters in the chemical, aluminum and steel sectors throughout Europe.

"With the EU gas peaking at 334 euro (US$333) per megawatt hour (MWh) on Dutch TTF spot prices two weeks ago, which is 15 times its pre-crisis level, 10 times more than the U.S. prices and well above the prices in Asia, it is clear that the relation with a normal market is lost," an open letter signed by all organizations read. "Beyond the current impact on citizens through inflation, destructive consequences on gas and electricity industrial users are inevitable. The last weeks saw a great number of industrial plants shutting their doors or reducing their production in Europe and more are expected in the forthcoming weeks. These massive plant curtailments will increase Europe's dependency on third markets for strategic supply chains and will drastically increase the global carbon emissions."

It added: "For many energy intensive industries there is currently no business case to continue production in Europe nor visibility and certainty for investments and further developments. The effects of those closures are also starting to have a severe impact on our value chains endangering the European industrial base and the availability of essential products more broadly."

There has been a spate of production curtailments in the ammonia and nitrogen sectors in recent weeks. According to market watchers, CRU Group, 50% of total European ammonia capacity (excluding Ukraine) has been shuttered or curtailed while nitrogen production capacity is down by 33%. In the aluminum and steel sectors, companies including steel major?ArcelorMittal?(NYSE:MT) and Dutch aluminum maker?Aldel?(Damco Aluminium Delfzijl Co?peratie) announced closures. Across all sectors, record gas prices sparked by Russia's throttling of supplies to Europe have been blamed. For additional information, see September 6, 2022, article -?European Ammonia Production Slashed by High Gas Prices?and September 7, 2022, article -?European Steel and Aluminum Furnaces Shut as Gas Prices Spike.