Europe’s industry suffers from rising natural gas prices.
“Analysts and industry executives told Reuters that this winter could further hurt natural gas-dependent industries and force production cuts .” – Tsvetana Paraskova of OilPrice
Europe’s industry appears to be losing further competitiveness due to high energy prices, rising natural gas prices and concerns about gas supply this winter. This increases uncertainty about occupancy rates and rising costs.
European benchmark gas prices hover around the highest point this year due to the cold weather in November. This dashed hopes for a third mild winter in a row. In recent weeks, Europe has drained its natural gas supplies at the fastest pace since 2016 due to higher demand because of lower temperatures. This comes on top of the impending end of Russian pipeline gas towards Europe via Ukraine as of Dec. 31.
There is also increasing competition from Asia for spot LNG supply to meet winter demand there. As a result, the price of Dutch TTF natural gas, Europe’s gas benchmark, jumped to a 2024 high in November. The price continued to rise in December. European electricity prices also rose as a result. This winter could bring more pain for natural gas-dependent industries. Companies may be forced to cut production, analysts and industry insiders expect.
With higher energy costs in Europe, industries are losing competitiveness against America, Asia and the Middle East. For example, the Dutch gas price is five times higher than the Henry Hub benchmark for American gas .
Higher spot electricity prices from February 2023 threaten industrial production in major economies and weigh on producer confidence . Germany narrowly escaped recession in the third quarter this year.
The gross domestic product (GDP) of the euro area grew by 0.4% in the third quarter, according to Eurostat estimates. That was higher than expected as the two largest economies, Germany and France, performed better than forecast.