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Energy woes force plants to close in Germany

As the war in Ukraine drags on, German chemical makers suffer from lack of Russian supply

by Alexander H. Tullo
October 6, 2022 | A version of this story appeared in Volume 100, Issue 36


Trinseo's plant in Böhlen Germany.
Credit: Trinseo
Trinseo plans to close its styrene plant at this site in Böhlen, Germany.

The war in Ukraine is dragging Europe, Germany in particular, further into an energy crisis as Russia withholds natural gas supplies. The situation has become so severe that chemical makers are beginning to permanently shut down plants.

Trinseo says it has begun discussions with the local works council about the potential closure of its styrene facility in Böhlen, Germany. The company says the plant, which has 300,000 metric tons per year of production capacity, has lost a total of $30 million over the past four quarters.

“The cost position of the Böhlen facility is challenged due to the current energy cost environment in Europe as well as the facility’s smaller scale, and it’s difficult to envision significant earnings improvement at the site in the near to medium term,” Trinseo CEO Frank Bozich says in a statement.

In November 2021, Trinseo announced that it was exploring options to sell its polystyrene and styrene business, a divestiture that would have included the Böhlen plant. Citing uncertainty due in part to the war in Ukraine, the firm shelved sale plans in August.

Similarly, Olin has announced that it intends to shut down methylene chloride and chloroform production in Stade, Germany, by the third quarter of 2023. The company reduced its corporate earnings outlook in September because of deteriorating demand in Europe and North America. And the Japanese firm Arakawa Chemical Industries recently announced that it would close a hydrogenated hydrocarbon resin plant in Germany in 2023.

Russia has been scaling back natural gas exports to Europe, apparently in retaliation for European support for Ukraine in the war. According to a new report from the International Energy Agency, Russian gas supplies to Europe have declined by 50% since the beginning of the year and could decrease further. “The complete shutdown of Russian pipeline gas supplies to the European Union cannot be excluded ahead of the 2022/2023 heating season—when the European gas market is at its most vulnerable,” the report says.

Mariana Moreira, head of ammonia for the consulting firm Wood Mackenzie, says some sectors of the chemical industry have seen operating rates fall to 40–50% of capacity. “While all commodity chemicals are impacted as energy-intensive businesses, the sectors that are seeing the biggest adverse impacts are those that either consume natural gas as a feedstock or cannot pass costs on to end users,” she says, singling out the ammonia and nylon industries.

Indeed, CF Industries ceased production at its ammonia plant in Billingham, England, in August, and Yara International has cut its European ammonia production to 35% of capacity.

In a recent poll by the German industry group VCI of chemical companies operating in the country’s chemical heartland of North Rhine–Westphalia, 34% of respondents said they had to cut production.



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