As the Ukraine Conflict Continues, German Manufacturers of Styrene Struggle due to High Energy Prices
- 11-Oct-2022 3:56 PM
- Journalist: Timothy Greene
As Europe gets ready for a severe winter, the energy crisis is becoming worse. The combination of record-high natural gas prices and dwindling supply is fuelling anxiety. Germany, in particular, is being further dragged into an energy crisis due to Russia withholding natural gas supplies due to the conflict with Ukraine. The situation has become so severe that chemical companies are started to shut down plants permanently.
Trinseo claims about possibly closing its Bohlen, Germany, styrene production. According to the corporation, the plant has a production capacity of 300,000 metric tonnes annually and reportedly lost $30 million over the previous four quarters.
According to a statement from Trinseo CEO, "the Böhlen facility's cost position is challenging due to the present energy pricing environment in Europe and the facility's smaller scale, and it is difficult to anticipate meaningful profitability growth at the site in the near to medium term."
The Böhlen factory would have been included in the divestment of Trinseo's Polystyrene and Styrene business that was announced in November 2021. The company delayed sale preparations in August, citing uncertainties brought on in part by the conflict in Ukraine.
The company decreased its corporate earnings outlook in September due to the declining demand in Europe and North America. Consequently, the Styrene price CFR Hamburg were assessed at USD 1252/MT during the recent week as Styrene supplies shrank in Europe to bring more product to market. Asia, however, was too far away to satisfy the demand for quick deliveries.
According to ChemAnalyst, the closure of the plant will bring a state of sustainable development to the state. In addition, with current inflation rates and growing energy prices, closing the loss-making facility may be the only viable choice left. Traders were forced to look for goods locally, creating the ideal conditions for upward price momentum. The Middle East and Russia could not ship styrene by sea or rail to Europe.