stockmarketwalk Russian gas export to Europe reduced by 30-50 percent on average in the last couple of weeks in June, since Russia has been cutting off European countries from its gas transit one by one.
The situation foreshadows an energy shortage in general. This can have effect on one of the world’s largest chemical suppliers, BASF.
It threatens the chemical production by dual impact: there would not be sufficient energy for the production process and absence of a critical raw material for the manufacture of products.
The management – who has never faced such a situation before – is thinking about the scenario in which the complex could be shut down.
Currently there is no substitute for the gas as a raw material or as an energy source, it said.
In Europe, BASF uses around 60% of the gas it buys to generate energy needed while production and the remaining 40% as a raw material to produce essential basic chemicals.
The chemical company is positioned at the beginning of the supply chain; hence the impact of the shutdown goes beyond the chemical industry. In the value chains, a wide range of products for almost all industrial sectors based on them.
The shutdown would not only affect the company and the 39,000 employees in Germany; however, it would practically endanger the stability of economic figures and food production in Europe. Possible consequences: higher inflation, slowing growth, and even a worsening food crisis due to the curtailment of ammonia production (fertilizer raw material).
Image: Unsplash
Source: trademagazin & reuters
