A regrettable lawsuit between Nippon Gases and a prominent Belgian brewer is certainly (and regrettably) the latest in a pent-up CO2 business dominated by its European feedstock depression.
Shortages have been present for some time, and various warnings of price increases have been more than implied for months.
As far as we know, the CO2 business in Europe and transatlantic North America has not been flat for more than 12 months. As such, depleted inventory or storage levels are no longer sufficient to withstand any further market squeeze.
"Gas World" reported on September 16, 2021 that there may be a new carbon dioxide supply crisis in the UK and Europe as a whole. The concerns come against a backdrop of soaring gas prices putting pressure on the fertilizer industry and the imminent closure of two major fertilizer plants in Cheshire and Teesside, England.
A chain reaction of factory closures across Europe ensued as other fertilizer producers succumbed to the same high feedstock (natural gas) prices and low ammonia margins. Although a crisis has been temporarily averted in the UK and across Europe, the situation is far from calm.
We asked in 2021, how long will gas prices stay this high? So far it has been more than 6 months since the start of this bloody and brutal war - with gas prices hitting record highs, giving economies across Europe wreaked havoc. Combined with maintenance shutdowns of ammonia plants at key locations around the world, both expected and unforeseen, the CO2 market remains tight and will continue to have an impact.
Back in early March 2022 there were widespread warnings that CO2 prices would “surge” and we are now seeing warnings that a “perfect storm” of market conditions would push the UK CO2 market towards potentially severe shortages.
This frustration is understandable.
Seasoned observers will tell you that it is usually the customers in the spot market who express their concerns about market pricing and shortages the fastest and loudest. However, one wonders whether it is really surprising that contract customers appear to be in a similar predicament at such a sensitive time for CO2.
Gas World has long known from various sources that the CO2 industry has been working hard to minimize the impact of these supply chain challenges on customers.
We must also remember that we are in the midst of a cost of living crisis in many countries, that the energy crisis is as much a threat to the industrial sector as it is to consumers, and we are only just recovering from a crisis in global supply chains that reminds The fragility of our manufacturing business model. In short, with so many tipping points in today's economies, it's no wonder they'll be hit so hard in 2022.
For Europe's CO2 industry, the story is certainly a reminder that a perfect storm is looming. As dark clouds gather and depression mounts, we can only hope that the storm will die down and that the worst of this crisis will pass soon.
