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Here Are Five Companies Suffering From Europe’s Energy Crunch

Here Are Five Companies Suffering From Europe’s Energy Crunch

Europe’s energy-intensive industries at the core of the continent’s manufacturing prowess are feeling the squeeze from higher gas prices.

Some companies have started to cut output as high costs render production unprofitable. That’s even before winter sets in and Europeans start turning on heaters, which risks bringing low gas reserves down to critical levels. 

Russian President Vladimir Putin’s offer on Wednesday to stabilize the market cooled the rally, yet the crisis isn’t over. Business failures or job losses could reduce support for the shift to clean energy. Companies that are major energy users in Europe have about 3.2 million workers, equal to 11% of total industrial employment, a study commissioned by the European Parliament showed.

Here Are Five Companies Suffering From Europe’s Energy Crunch

Here are five companies in five key industries that are particularly exposed.  

Chemicals

BASF SE, Europe’s largest chemicals firm, has cut back ammonia production -- important for a range of products including fertilizer -- at plants in Germany and the Netherlands. A spokesman said BASF was feeling the effects of the crunch, though the company hasn’t given specifics on the potential impact. 

Metals

Zinc producer Nyrstar has dialed back output at a smelter in the Netherlands after a fourfold surge in power costs. Cutbacks may spread to aluminum production, which uses huge amounts of power. The closely held company also hasn’t disclosed the financial impact. 

Building Materials

Producing a ton of cement requires around 4.7 million British Thermal Units of energy, equivalent to about 400 pounds, or 180 kilograms, of coal. French construction products firm Saint-Gobain said it would take a 1.1 billion-euro ($1.3 billion) hit from rising energy costs during the second half alone. 

Paper

The industry has had a hard time predicting when people might return to the office as pandemic restrictions ease, a key driver for paper demand to print newspapers and magazines. Irish paper giant Smurfit Kappa Group Plc’s shares have lost over 10% of their value since September. The company listed rising energy costs as a principal risk to its business before the recent surge in gas prices. 

Agriculture

Besides higher fertilizer prices, other parts of food production are feeling the pinch. French sugar producer Tereos SCA warned in August -- when energy prices were much lower than they are now -- that the gas rally would raise production costs “tremendously.” 

©2021 Bloomberg L.P.