European fertilizer production falls 70% due to record gas prices

Published
08/26/2022 19:46

Updated
08/26/2022 19:46

The escalation of gas prices to record levels has caused the reduction of more than 70% of the capacity of fertilizer producing companies in the Old Continent and it leads the sector to an unprecedented crisis, as warned by the ‘lobby’ that brings together the main European companies and associations in this industry, including the Spanish Fertiberia and Anffe (National Association of Fertilizer Manufacturers) or the Norwegian Yara.

In a statement, European Fertilizers, an association made up of 17 fertilizer manufacturers and eight national associations, maintains that, at current natural gas costs, between eight and ten times higher in Europe than in the United States and other centers of the fertilizer industryEuropean producers cannot compete on the national and world market.

“The European fertilizer industry is in the midst of a crisis because the european gas market is bankrupt“, said Jacob Hansen, CEO of European Fertilizers, referring to the impact of the record prices of natural gas, which represent 90% of the variable production costs of the industry and “make it impossible for European producers to compete”.

“As a result, more than 70% of European production has reduced capacity“, Hansen warned, pointing out that, if the situation continues, the remaining producers may also be affected. In this sense, the Association considers it necessary urgent and decisive action to address the crisis by the EU in order to restore the production of fertilizers, key to ensure the strategic autonomy of the EU and to guarantee the long-term food security of the Old Continent. “The current crisis demands swift and decisive action from EU and national policy makers for the energy and fertilizer market,” Hansen urged.

suggested measures

In this way, the director of European Fertilizers considers it necessary analyze the gas market to address current challenges, support the domestic industry and restore market confidenceas well as seriously evaluating crisis management policies for the fertilizer industry to minimize long-term repercussions for EU food security.

“Moving away from dependence on energy supplies and raw materials from Russia cannot be achieved by closing plants and moving jobs out of Europe,” Hansen defended, for whom it is necessary “an urgent correction” of current gas policies to deal with this serious crisis.

“Europe needs a strong domestic fertilizer industry to continue producing food and, in the long run, develop Europe’s hydrogen economy using green ammonia supplied by the fertilizer industry,” he added.