European fertilizer producers are cutting back or halting production. The reason is record high prices for gas, which European companies have so far received mainly from Russia. Norwegian chemical group Yara – the Old Continent’s largest producer – has just announced the shutdown of 65% of its ammonia facilities. Other European plants are also halting production. According to the Financial Times, this situation pushes Europe even further in the direction of recession. Experts also add that the demand for road transport may drop perceptibly.
The situation is serious because fertilizer producers are part of the supply chain associated with food production. Less use of fertilizer in agriculture could translate into lower crop yields next year, resulting in a spike in food prices. An additional problem is the shortage of carbon dioxide and its solid form, or so-called dry ice, which are byproducts of fertilizer production. The shortage of this compound will cause a rapid halt in production at many food companies ( for example, the Polish branch of #Carlsberg has announced that it may halt beer production in the next few days, because carbon dioxide is an essential substance for brewing beer).
Fertilizer producers and beer producers alike, as well as many food industries dependent on carbon dioxide production, generate high demand for road transport (including rail freight). If the situation with fertilizer production is not resolved, this will also entail considerable consequences for the transportation market and a significant drop in capacity demand.