Energy prices are unbearably high, 11 European industry associations have warned

Europe's energy crisis worsened this week as gas shortages, nuclear outages, a drop in wind power generation cold weather pushed up prices. Eleven industry associations, including steel, fertilizer, cement paper, jointly warned that energy prices were unbearably high many industrial companies had to reduce even suspend production.

Gas prices in Europe hit a record high

Gas futures in continental Europe the UK both jumped more than 20% on black Tuesday, with continental TTF benchmark Dutch gas futures closing at a record high of 182 euros per megawatt hour. During the day, wholesale gas prices in the UK also hit a record 451.72 pence per kilocalories.

Cold temperatures across Europe, low gas supplies in Russia low wind power generation in Germany combined to push gas prices in Europe the UK to new records on Tuesday.

Meanwhile, gas flows west through the Yamal-Europe pipeline have been declining since Saturday even reversed course to Poland after stopping early On Tuesday, according to German gas transmission system operator Gascade.

A quarter of the EU's energy mix comes natural gas, with an annual demand of 480 billion cubic meters. Russia is its biggest source of gas, accounting for 43% of eu imports. The Yamal-Europe pipeline, which spans the territory of Russia, Belarus, Poland Germany, is capable of transporting 33 billion cubic meters of gas a year, accounting for more than one-sixth of Russia's total gas shipments to Europe.

News of lower flows the Yamal-Europe pipeline added bullish factors to the gas market, according to Reuters. James Waddell, Head of European gas at UK-BASED consultancy Energy Aspects, said: "Europe has had very little storage cushion this winter, so it is more dependent on imports than in previous years."

With the onset of winter in the Northern Hemisphere, the continent will be at the mercy of nature.

With 30 per cent of France's nuclear capacity due to shut down in the coming weeks, contract prices for French electricity have surged 26 per cent.

In another wrinkle this week, the amount of electricity produced by Germany's thousands of wind turbines has fallen to a five-week low as cold weather puts pressure on the grid.

German electricity prices rose 30 per cent to a record €431.98 per megawatt hour as the grid strained.

It now looks like Europe's energy crisis could get worse as cold weather is expected to continue in the coming weeks.

Energy prices are unbearably high, 11 trade associations have warned

Europe's energy crisis is raging, manufacturers are standing on the Z front of the storm, but they may soon be losing it.

On Wednesday, 11 industry associations, including steel, fertiliser, cement paper, issued a statement warning that EU leaders were responding quickly to an exponential rise in energy prices, which are now unbearably high.

The statement said the energy crisis has hit most European countries. Energy prices have risen four to five times in recent months have reached even higher levels in the past few days. Meanwhile, carbon prices have tripled since the start of the year.

The main reasons for this are speculation in financial markets, imbalances in the natural gas market, seasonal reductions in renewable energy production, reductions in nuclear power production, coal mine closures higher carbon costs passed on in electricity prices.

Eleven trade associations have warned that high energy prices are forcing many industrial companies to cut production even temporarily close plants

Energy-hungry aluminium smelters, for example, have been forced to cut output. Dunkirk of France, Europe's largest aluminium smelter, has limited production for the past two weeks, according to local media reports.

Azomures, one of Romania's biggest fertiliser producers, said its production facilities had started to close that farmers would no longer be able to bear the high fertiliser prices.

Yara International, a Norwegian fertiliser producer that cut production earlier this year, said it would continue to monitor the situation closely cut production if necessary.

The statement warned that the current situation had a serious impact on the competitiveness profitability of Europe's energy-intensive businesses because they were vulnerable to sharp price increases. So a prolonged period of unbearably high energy prices could lead to serious losses, the emigration of European companies, an increase in carbon leakage.

Natural gas is used to generate electricity can also be used directly to make products such as fertilizer plastics. While most big companies have long-term supply contracts, there are growing concerns that continued price increases could undermine their competitiveness.

Eleven industry associations have called on Europe's leaders to respond positively to the energy crisis make swift use of the "toolbox" proposed by the EU in October, while taking urgent action if necessary to help European industry overcome its difficulties.

American gas ships bound for Asia are diverted to Europe

Us liquefied natural gas (LNG) ships en route to Asia have unexpectedly turned back towards Europe after European gas prices hit record highs. European prices are more lucrative for U.S. gas traders.

European prices are now about $24 per million British thermal units above benchmark LNG prices in Asia, according to Bloomberg estimates. At least ten other LNG cargoes have been diverted Asia to Europe.

Us gas prices have almost halved recently, the gap between US European gas futures is widening. On Tuesday, benchmark Dutch natural gas futures were nearly $52.90 per million Btu higher than the front-month U.S. contract.

According to shipping data, there are at least 30 ships carrying LNG the United States to Europe. Of those, 10 LNG ships the United States have announced Europe as their destination, while another 20 cargoes appear to be making their way across the Atlantic.

Gas prices in Europe the UK retreated after Tuesday's frenzy, but remained stubbornly high.

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Source: Sinochem News

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