After being beaten to the ground in 2022, European industrial gas demand started to shows first signs of recovery in August23.
Industrial gas demand dropped by around 20% (or 30 bcm) in 2022, with over half of it due to production curtailments. the most gas (and energy) intensive industries, such as fertilisers and petrochemicals were hit the hardest.
This downward trend continued through the first half of 2023, when industrial demand dropped by close to 10% yoy across the key European economies portrayed below (and accounting for almost half of European industrial gas demand).
Productivity rates in key gas consuming industries, such as chemicals, pulp&paper and metallurgy, suggests that production curtailments remain a key driving force behind lower gas use in industry. manufacturing PMIs hovering in the low 40s are also confirming this.
TTF prices averaged at $11.5/mmbtu in the last six months, sufficient to improve some demand response from industry.
Preliminary data suggests that industrial gas demand was up by 13% in Belgium, over 20% in Spain and over 15% in Germany compared to last year’s August.
This recovery remains fragile. while current prices are significantly lower than what we had last year, they are still twice the price levels between 2016-20, and a cold heating season could rapidly correct upwards price dynamics.
What is your view? How will European industrial gas demand evolve in the coming years? how much of the lost demand in 2022 will recover?
How much is permanently lost? Are we entering the era of deindustrialisation?
What does it mean for food supply security?
Source: Greg MOLNAR