Major European gas users cut demand on high prices
Record high natural gas prices in Europe this summer have squeezed industrial margins to the point where manufacturing is no longer profitable for some users. Norwegian fertiliser Yara is the latest to do so, announcing September 17 that the cost of making ammonia has forced it to shut some plants down indefinitely and to "optimise ongoing maintenance" at others.
All in all, Yara said it will "by next week have curtailed around 40% of its European ammonia production capacity." It said it would continue to monitor the situation, with the objective to keep supplying customers but curtailing production where necessary.
Rival CF Industries, a US manufacturer, said September 15 it had halted operations at both its Billingham and Ince complexes in response to high gas prices. It too does not have an estimate for when production will resume at the facilities.
The news has stoked fears of higher food prices next year as one of the consequences of the high prices. Fertilisers will need to be applied to the ground early next year, and the closures have reportedly led to panic buying of other products.
On top of all the other woes, a France-UK 2-GW power cable caught fire earlier in the week, although at time of press gas was only accounting for 38% of the mix, while wind was on 17%, marking a significant increase since the early September heatwave. Even the very limited amount of remaining coal-fired capacity was doing more work than wind September 6.
The problem of high gas prices is global, leaving all fertiliser manufacturers in a similar dilemma as natural gas is a major element of the cost structure.