Natural gas prices in Europe have dropped close to pre war levels, easing energy costs but offering little relief to the continent’s weakened industrial sector.
Years of high prices forced many manufacturers to shut plants or move production abroad, decisions that are unlikely to be reversed by short term price declines. Benchmark gas prices are now around €27 per megawatt hour, far below the 2022 peak, but structural challenges remain.
Major companies such as BASF, Dow, and Thyssenkrupp continue to cut or suspend European operations, citing global oversupply, weaker demand, and high regulatory costs. Corporate insolvencies in western Europe hit 190,449 last year, the highest in over a decade.
Europe’s competitiveness still lags the US and China, where energy is significantly cheaper. Germany’s chemical plants are running at just 70% capacity, and producers face both higher power costs and expensive carbon allowances.
The region’s growing reliance on imported LNG, now about 45% of gas supply, keeps prices structurally higher than in the US. While renewables have expanded rapidly, Europe remains dependent on gas when wind and solar output is low.
Analysts say lower gas prices help at the margin, but they are not enough to restore Europe’s industrial base or shift long term investment decisions.
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