FRANKFURT, July 27 ― Germany's BASF, the world's largest chemical company, is considering further cuts to ammonia production due to soaring natural gas prices, two...
FRANKFURT, July 27 ― Germany's BASF, the world's largest chemical company, is considering further cuts to ammonia production due to soaring natural gas prices, two sources familiar with the matter said, with potential ramifications from farming to fizzy drinks.
Unlike many European countries, Germany has no liquefied natural gas port terminals to replace Russian pipeline gas. That means companies are under political and commercial pressure to reduce gas intensive activities if gas deliveries are cut further. Fertiliser giant Yara, which runs Germany's third-largest ammonia production site in the northern town of Brunsbuettel, said its output across Europe was currently 27 per cent below capacity due to the surge in gas prices.SKW said it was in the process of resuming full production after a scheduled maintenance shutdown but the future capacity utilisation rate was extremely difficult to predict.
Ammonia production would be a prime candidate for cuts to cushion any gas supply squeeze over the next few months, said Arne Rautenberg, a fund manager at Union Investment. Russia resumed pumping gas via its biggest pipeline to Europe, Nord Stream 1, on July 21 after a 10-day maintenance outage, but Gazprom on Monday said supplies to Germany would drop to just 20 per cent of capacity.
SKW can cut output at each of its two production lines for ammonia and urea by no more than 20 per cent or it would have to suspend output entirely in a costly ramp-down, a spokesperson said.
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