The chemical industry stops production as early as 2022 due to the price of energy companies

The chemical industry is declining due to the high cost of the energy bill. The sector is expected to close this year with production just 0.2% higher than in 2021, according to data presented this Thursday by the FEIK Employers’ Federation, which also elected in its assembly to Teresa Raceru (from Air Liquide) as president of this business association. These companies also asked the government to take measures to set a maximum price for gas for industrial use, including the price used as a raw material. The crash occurred in the second half of the year, driven by gas and electricity prices, Faik explained.

However, higher prices due to the high cost of energy with which the sector affects the prices of its products will allow these companies to close the year with an increase in turnover of 17.6% to €90,835 million.

We have before us a huge challenge that began in 2021 due to the continuous increase in gas prices, which definitively accelerated after Russia’s invasion of Ukraine. This circumstance continues to cause not only exorbitant energy prices, but also risks of shortages in the multiple raw materials present in the main value chains of the economy,” President Feique noted during her speech.

Starting with the invasion of Ukraine, and with a greater intensity after the gradual reduction of gas supplies from Russia, a decrease in the production curve began, according to Vick, who warned that the sector is experiencing a halt in production plants, because demand does not offset the increase in costs. The situation is not homogeneous for the entire chemical sector, with the decline concentrated above all in basic chemicals, which are more energy-dependent in nature, and which are already accumulating a six percentage point drop this year.

Within the European Union, “the situation of the sector is more serious, especially in Germany, where chemical production is already declining by about 10%”, assures from the Federation of Employers. This situation for the rest of the major European producers is a very negative sign due to the high interdependence of inputs, Rassero explained. Germany is the largest trading partner of the Spanish chemical sector, with trade exchanges exceeding 12,000 million annually.

Urgent actions for gas and electricity

The new head of Feique stressed that it was essential that the European Commission, once the German reluctance was resolved, urgently establish the mechanisms that would allow the price of gas to be reduced, either by setting a maximum purchase price, joint purchase models or interventions. At the same European reference price.

At the national level, Feique is asking the government to set a cap on the price of gas for industry, which applies not only to energy consumption, but also to gas as a raw material.

Rasero replaces Carles Navarro, President of BASF, who has served as the High Representative of the Confederation of Employers since October 2018. This association includes 3,000 companies that directly employ 710,000 people in Spain.