SKW Stickstoffwerke Piesteritz in the German state of Saxony-Anhalt, for example, on Tuesday said it would cut ammonia production by 20 percent and warned of a possible complete shutdown.
CEO Peter Zingr attributed the decision to the inability to run “economically sensible production” due to rising gas prices. “We demand immediate political action. Without government action, there is a threat of production stoppages in the near future,” he was quoted as saying by Handelsblatt. “The consequences will not only affect Saxony-Anhalt as a place of business, but also the processing industry, logistics and agriculture in Germany,” he added.
SKW Stickstoffwerke Piesteritz is the country’s largest producer of ammonia, from which nitrogen fertilisers are produced, urea (high nitrogen fertiliser) and Adblue, a popular reagent for cleaning diesel engine exhaust gases.
Britain’s Energy Intensive Users Group (EIUG), which represents the interests of energy-intensive steel, chemicals and fertiliser producers, said on Tuesday that soaring prices had already led to a halt in steel production during “peak demand” periods. EIUG suggested that the authorities introduce temporary measures to curb rising gas and electricity costs as well as carbon prices. Manufacturers also believe that energy market regulator Ofgem may follow the example of European competitors and reduce tariffs.
“We have already seen the impact of truly astronomical increases in energy costs on production in the fertiliser and steel sectors. No one wants a repeat of this in other industries this winter, given that the UK’s energy-intensive industries produce so many essential household and industrial goods and are inextricably linked to many supply chains,” said chairman Richard Lees.
In September, US fertiliser producer CF Industries had already shut down two UK plants that produce 60% of the country’s commercial carbon dioxide supply due to rising gas prices, before the government stepped in to cover the cost of running one of the plants for another three weeks. In the same month Norway’s Yara, the world’s second-largest fertiliser producer, announced plans to cut ammonia production by 40%.
In the UK, a total of 12 electricity suppliers have gone bust this year, serving around 1.5m households, nine of which have declared bankruptcy since the beginning of August.
The price of gas at European hubs has continued to rise, crossing $1600 per thousand cubic meters for the first time on Wednesday, October 6, and then $1900. These historic price increases are attributed to: low levels of European underground storage capacity, windless weather which has led to a significant drop in wind generation, shortages of LNG and coal, and uncertainty about the timing and volume of supply through the new Nord Stream 2 pipeline.
Earlier today, the five EU member states – France, Spain, the Czech Republic, Greece and Romania – proposed investigating the causes of the price hikes and creating a common toolkit to respond to such surges in the future and coordinate policies on fuel procurement and storage.