Premium Special Report-Record High Natural Gas Prices Disrupt Industry

Manufacturing and global supply chains have started to feel the pressure of global record high natural gas prices. Some sectors, food industry in particular, have been affected badly, and could pass the rising prices to their customers. As a result of soaring prices, some steel, fertilizer and glass manufacturers had to halt or reduce production.

Recently, a fertilizer producer in Britain announced it would cut production in its two factories. British Government said it would provide support to prevent disruption in food production.

There are several reasons behind the increase in natural gas prices: Increased demand from Asia due to pandemic recovery, low gas inventories, and a drop in supply from Russia.

The prices, as a result, have risen by more than 250% in Europe and 175% in Asia this year. In the US, the prices have also doubled since the start of the year. Electricity prices haev also gone up since many of the plants are powered by natural gas.

To ease the pressure, some countries look into increasing exports, such as Norway. Russia, Europe’s largest energy supplier, has announced that Nord Stream 2 pipeline was complete. The project is awaiting paperwork from Germany’s energy regulator to become functional.

After CF Industries’ decision to halt operations in its two UK plants, Norway’s Yara International, one of world’s biggest fertilizer producers, said it would cut its production in Europe by 40%. The company said it was more feasible to produce ammonia in the US or Australia and import it to Europe, rather than producing it there.

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