Germany’s chemical industry has been hit hard by soaring gas prices, according to a survey.
According to the report by the Munich-based ifo Institute for Economic Research published on Tuesday, the Russia-Ukraine conflict has “further exacerbated the tense situation in the industry”. Business expectations fell to minus 44.4 points in July, compared to plus 11.8 points in the same month in 2021.
“High energy prices are causing production in Germany to fall, while import pressure is increasing,” Wolfgang Grosse Entrup, Managing Director of the country’s chemical industry association VCI, told Xinhua on Tuesday.
In Germany, 44 per cent of the energy consumption of the chemical industry is covered by natural gas, while around 30 per cent of all chemical products require its use, Xinhua news agency reported.
Gas prices in Europe are more than twice as high as before the start of the Russia-Ukraine conflict in late February. European TTF gas futures were trading at around 190 euros ($195) per megawatt hour on Tuesday.
Europe’s biggest economy relies heavily on gas supplies from other countries. In 2021, 95 per cent of natural gas fed into Germany’s grid was imported, according to the Federal Statistical Office (Destatis).
In the past, Russia was one of the main suppliers of natural gas to Germany; in May, natural gas and crude oil worth 1.9 billion euros were still being imported from Russia to Germany.
However, at the end of July, Russia further reduced gas supplies to Germany through the important Nord Stream 1 pipeline, to the current 20 per cent.