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The world’s biggest chemicals company, Germany-based BASF, will seek permanent cost-saving measures in Europe due to the high energy prices endangering its competitiveness, chief executive Martin Brudermüller said on Wednesday.
In comments accompanying BASF’s third-quarter results release, Brudermüller said, “Uncertainties due to the enormous number of regulations planned by the E.U. are weighing on the chemical industry.”
“These challenging framework conditions in Europe endanger the international competitiveness of European producers and force us to adapt our cost structures as quickly as possible and also permanently. We, as a company, must act now,” Brudermüller said.
“Our cost savings program aims to safeguard our medium- and long-term competitiveness in Germany and Europe. We must take decisive action to fulfill our responsibilities to our employees, shareholders and society.”
BASF has now become one of the most high-profile warning signs of European industry losing competitiveness in the long term due to the surge in energy costs in recent months.
Another chemicals giant, German polymer materials maker Covestro, also flagged high energy and raw material prices that weighed on its Q3 earnings.
“Covestro’s business performance in the third quarter of 2022 was, as expected, strongly impacted by high energy and raw material prices in the face of the current European energy crisis,” the company said on Tuesday.
European industries are slammed by soaring energy costs so much that they are curtailing or shutting down production, losing global market shares, and risking permanent damage to Europe’s competitiveness. Surging natural gas and electricity costs have resulted in a jump in operational costs for all industries, from steelmaking and car manufacturing to textiles and clothing. As manufacturers are curtailing, shutting down, or relocating production, they risk never reopening in Europe again, eroding the EU’s competitiveness, including in the industries crucial for the energy transition, such as the metals sector.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com