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Friday, December 2, 2022

Chemicals, production at risk: ammonia is missing and Chinese sell for 30% less

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Chemistry on the cutting edge. Energy prices are skyrocketing, and so are those of some raw materials such as ammonia. Which are no longer available and in any case are becoming more and more expensive. High costs cause European companies to go bankrupt: the costs of Asian (but also American) competitors are 30 to 50% lower.

Methyl methacrylate, that unattainable plastic

Let’s take a few examples. Let’s take methyl methacrylate, a plastic similar to glass that is used in the automotive sector but also in construction (it is used, for example, to make shower cubicles). In Europe 60% of producers stop. The same applies to the fertilizer plants in Oci and Ozomures, Skw and Fertiberia. Ammonia companies are on their knees because the costs of the production process are for 80% related to gas. The Ferrara factory of the multinational Yara has already been shut down several times. But ammonia is a staple in many chemical productions. Angelo Radici, Chairman of the Radici Group of Bergamo (3,000 employees, 1.5 billion turnover) says: «In the region specialty chemicals we work in fits and starts: we have shared these issues with our customers and are trying to deal with them proactively. Ammonia is one of the most important raw materials at our sites in Novara and Zeitz in Germany. But there is very little available on this material in Europe ». «In general – adds Radici – the group has suffered in recent months from the increase in energy and gas costs for the operation of its industrial processes and from the price increases that our suppliers of raw materials in turn had to pass on. A double increase that puts our productions in trouble ».

Competition also from the US

Donatella Martini, the manager, clearly represents the situation in the sector purchase by Sir Industrial: «We produce resins for paint and construction, resins for insulating metal. The prices of finished products are falling, but the cost of gas is rising. What hurts the most is that our European raw material suppliers are going out of business because of gas costs. We prefer European petrochemicals, but now Chinese and Americans are even 30% cheaper ». And again: «Since June, the market has started to slow down. Chinese demand fell first. Hence the Chinese chemical suppliers actually they got scared and flooded the market with cheap products. Demand in Europe also stopped abruptly when they returned from vacation ». The level of alertness is also high in Coim, 1.4 billion turnover, an Italian multinational with 1,400 employees worldwide, of which 500 in Italy: “Old Chinese competitors that had disappeared from the market today offer prices 30-40% lower than the our.Please note: at the moment we are producing at a loss, the products are only enough to cover the cost of raw materials and energy – CEO Giuseppe Librandi stretches out his arms – Chinese and Asians “steal” the market from the European without any trouble because with their gas prices, selling at 30-40% less than ours means having high margins anyway. To understand, in the US, gas costs a seventh compared to Europe and energy a little less than half. We will resist as much as possible, as a matter of ethics and responsibility, but not indefinitely ».

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Source: Corriere

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