Chemical Raw Material Prices Surge by 11%!

A labor strike took place at Chevron’s Gorgon and Wheatstone liquefied natural gas (LNG) projects in Australia. This strike, prompted by negotiations breakdown on working conditions and wages, resulted in a substantial 11% increase in European natural gas prices, as it affected 7% of the global LNG supply from these projects. If negotiations don’t reach a resolution, Chevron plans to halt operations for two weeks starting from September 14th, potentially reducing LNG production by 1.1 million metric tons.

The impact on global natural gas prices has been significant. Reduced gas shipments due to the strike led to price surges in Europe and the United States. Natural gas prices at the Henry Hub in the U.S. rose by 2.6%, while European benchmark prices increased by 7.2%. Additionally, the European benchmark TTF gas futures saw a nearly 9% increase.

Throughout the year, global natural gas prices have remained high, with U.S. prices doubling from the previous year and reaching a decade-high in mid-August. In Asia, prices increased sixfold compared to the previous year, and in Europe, they surged tenfold. China, heavily reliant on imported natural gas, experienced a 14.60% increase in domestic LNG benchmark prices and a 23% increase over the past month alone. This rise in costs has affected domestic gas supplies and raw material production.

The broader impact of transportation challenges, labor strikes, and OPEC+ production cuts in the energy sector has expanded the scope of the energy crisis. Raw material prices are on the rise due to these incidents, along with market forces and policies. As the autumn and winter seasons approach and Australian natural gas production remains uncertain, there’s potential for further substantial price increases in natural gas. Businesses need to plan carefully and make informed decisions to mitigate the impact on their operations, especially given that end-user demand has not fully recovered compared to previous years.