(Bloomberg) -- Manufacturers from chemicals to metals and machinery curbed production last year in the fallout from Germany’s energy crisis. As the cutbacks linger, it’s a sign that a deeper industrial malaise is setting in.Most Read from BloombergTrudeau Is Stuck in India With Faulty Aircraft After Hearing Criticism From ModiThe Mighty American Consumer Is About to Hit a Wall, Investors SayTesla and China Risk Leaving Volkswagen on a Road to NowhereTech Giants Power Stock Gains as Tesla Jumps 1
The record-high prices that were triggered by Russia’s squeeze on deliveries last year are now gone, but worsening economic conditions are hitting demand just as hard. Gas usage across Europe’s industrial landscape is projected to remain about 20% below 2021 levels, according to data from S&P Global Commodity Insights.
“There is currently no indication that the situation is improving,” said Tilo Rosenberger-Süß, spokesman for the hub’s operator InfraServ Gendorf, adding that the trend could lead to long-term demand destruction at the facility.Despite an 80% decline from last year’s gas prices — which made some production unprofitable — Germany’s energy-intensive industry is struggling even more than the broader manufacturing sector. That’s especially true for chemicals.
After massive investment in liquefied natural gas infrastructure and soaking up cargoes on the global market, the risks of shortages this winter is limited. But that shock was been replaced by concerns about a deep-rooted recession, which has made German businesses hesitant to ramp up production again.With European economies strained by higher interest rates, there are fears that some gas demand might never come back.
It’s not all grim. There are signs of recovery in refining, and some segments are too critical to cut for long.
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