Andrew
Europe’s industrial heartland faces a potential exodus as manufacturers of German car parts, chemicals and steel struggle to absorb power prices that rocket to new highs almost every day.
Power and gas prices in Germany more than doubled in just two months, with year-ahead electricity — a benchmark for the continent — soaring past 540 euros (US$545) per megawatt hour.
Two years ago, it was 40 euros.
“Energy inflation is way more dramatic here than elsewhere,” said Ralf Stoffels, chief executive officer of BIW Isolierstoffe GmbH, a maker of silicone parts for the auto, aerospace and appliance industries.
“I fear a gradual deindustrialisation of the German economy.”
The nation relied on gas from Russia to fuel its power plants and factories, but now it’s preparing for an unprecedented challenge to keep lights on and businesses running after Russia slashed those flows.
Temporary shutdowns due to high prices have been seen before, with fertiliser and steel production curbed in December and March.
Now, prices are seeing an even more sustained rally that’s tightening the squeeze.
European gas for next month settled Thursday at a record high of 241 euros per megawatt-hour, about 11 times higher than usual this time of year.
“Some industries will go under serious stress and will have to rethink their production in Europe,” he said. – Bloomberg.
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