Huge shortages: new price explosion coming in Hungary

70 percent of European fertiliser plants halted their operations as natural gas prices soared to unprofitable levels. The natural gas deficit has broad effects as it does not just hit energy production and the chemical industry, but it spirals out to many different sectors too. The price of basic necessities, which require natural gas in any way during their production, may rise to unimaginable levels.

László Bige, the owner of Nitrogénművek Zrt. in Pétfürdő, depicted an appalling impending scenario in response to the inquiry of Index. According to him, the average natural gas cost of the plant in the past 10 years was around 5-20 million. As the price of natural gas is currently around 300 euro/MWh this would mean that the same amount of natural gas would cost approximately 144 million euros per month, not even counting other extra cost rises. This cost increase would mean that the price of nitrogen-based fertilisers would rise to roughly 1,300-1,500 euros per ton. For many farmers, this is too much to ask for.

In some plants there was not any production at all this year, so even with affordable natural gas prices, the industry would not be able to clear the backlog. Europe must expect an enormous fertiliser shortage, which will not just raise prices, due to added cost to agricultural production, but also lower yields as many farmers cannot afford to buy fertiliser. All of these factors will eventually lead to renewed price hikes in the markets of the European Union. Through agriculture and livestock, the consumers will pay the brunt.

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But the prices are just one problem because the energy crisis will ruin many businesses which could potentially lead to the toppling of the chemical industry. If the plants cannot restart operations soon, then in addition to the high inflation redundancies may be necessary for various fields, which means rising unemployment.

“Inflation so far is just the beginning.”

The current inflation is only thanks to the grain price hikes from the past year, present increases are just adding up to the current prices. By the end of the year, the population will feel the true burdens of the energy crisis and if Russia cuts natural gas supplies totally for the winter the consequences may be even graver – says the owner of Nitrogénművek Zrt. in Pétfürdő.

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Source: Index.hu, 24.hu