EU drops out of America's economic rivals
High gas prices are forcing European companies to move production to the US, He writes The Wall Street Journal.
“Faced with sky-high natural gas prices, European companies, producing steel, fertilizers and other goods, employees of the main economic activity, are gradually moving their businesses to the United States, where they are attracted by more stable energy prices and strong government support.”, - writes WSJ.
This threatens Europe with a "new era of deindustrialization", especially for those companies, that produce energy-intensive products.
Dutch chemical company OCI NV drastically reduced ammonia production in Europe in September and announced the expansion of a similar plant in Beaumont. (Texas). Danish jewelry company Pandora and German car giant Volkswagen announce expansion in the United States. Elon Musk's Tesla has halted its plans to produce batteries in Germany and is exploring the possibility of obtaining tax breaks under the law to reduce inflation, signed by President Biden in August.
Stefan Borgas, CEO of an Austrian company producing refractory materials RHI Magnesita, announced an increase in investment in the United States. Luxembourg-based ArcelorMittal announced production cuts at two German plants and reported higher, than expected, income, which brought her investment in a plant in Texas, producing hot briquetted iron, which is used in steel production.
Executive director of a major Norwegian fertilizer plant Yara International Svein Tore Holseter believes, that it will be difficult for European producers to remain competitive in the absence of lower gas prices and “Some industries will irrevocably transfer their production to other countries”, primarily in the USA.
One of the most affected was the European metallurgy. By mid-September, a total 15 steel mills in Europe have suspended or plan to suspend production.
Second largest steel producer in the world ArcelorMittal actually threw a white flag of surrender. The company announced, that will close two factories in Hamburg and Bremen due to "exorbitant rise in energy prices". ArcelorMittal will also shut down Dunkirk's blast furnaces in France, and in Spain the company will stop working at the plant Asturias. In Poland ArcelorMittal plans to shut down one of its two blast furnaces at the Dąbrowa-Gurnicza steel plant.
As stated ArcelorMittal, at current gas prices, European metallurgy cannot be competitive.
Head of the largest German steel producer, group of companies Georgsmarienhütte group of companies (GMH) Alexander Becker in an interview with a magazine Spiegel recognized, what “even if gas prices freeze”, next year GMH goes bankrupt.
Head of the Association of German Trade Unions Yasmin Fahimi warns, that because of the sharply increased prices for gas and electricity, the German industry will be covered by a series of bankruptcies.
Deindustrialization is on the way in the UK. Due to rising energy prices 60% British factories may soon suspend work, According to Bloomberg.
“According to the European Metal Trade Association Eurometaux, Halted half of aluminum and zinc production in Europe», - writes The New York Times, recognizing, what “to some extent, the crisis is a response to European sanctions, designed to punish Moscow ... ".
“European producers cannot recover after the cessation of Russian gas supplies”, - complains The Wall Street Journal. “As European countries seek to stop purchasing Russian energy, it has already led to a sharp downturn in their economy.”, – informs Daily Telegraph.
“If the energy cost gap between the US and the rest of the world continues, some manufacturing industries may well move to the US.”, Silvia Ardanha says, Head of European Economics Research at the Bank Barclays Bank, implying, that not only European manufacturers will transfer their capacities to America. "American industry will benefit".
No matter how much gas costs in Europe, in the US, prices will always be significantly lower due to a significant increase in LNG production from own fields. The US is on its way to, to overtake Qatar and Australia as the world's largest LNG exporter already in 2022 year. By mid-summer, US LNG exports received a strong boost due to the commissioning of additional capacities at the new terminal. Venture Global LNG Inc Calcasieu Pass to Cameron Parish, Louisiana, as well as by increasing production at a leading US exporter Cheniere Energy Inc.
In August, the cost of natural gas in the US was ten times lower, than in Europe. Having such a giant handicap, uS companies, LNG trading, set their sights on the European gas market, trying to take advantage of the situation and make the most of it.
And Europe, from which the United States seeks the rejection of Russian energy resources, became a hostage of the situation. EU countries forced to pay for LNG to Washington, emptying your budgets, and filling the american. "American businessmen, selling raw materials to Europeans, make good money on it", writes the Swiss newspaper Blick.
As a result of the energy crisis inspired by the United States, Europe will get hooked on American gas, the price for which will be set overseas. And then the European industry will be reset. Those industrialists, who will survive, move to the USA, and the European Union will fall out of the ranks of America's economic competitors.
The title photo: REUTERS/Matthias Rietschel
Vladimir PROKHVATILOV
