Environmental regulations in Europe, economic slowdown in China, and energy prices in the global markets. These were the main challenges faced by the European energy and energy-intensive industries in 2015, and none of them will disappear once 2016 arrives. That is why, in the new year, Central Europe Energy Partners (CEEP) calls for a review of those EU regulations that block the competitiveness of European industry.
For the European energy and energy-intensive sectors, 2015 has been a time of battling efforts. “Major investments were accompanied by challenging macroeconomic conditions, with the prices of commodities hitting lows that were not seen for almost a decade. On top of that, China has been experiencing a considerable slowdown. Many of these challenges are beyond anybody’s influence, as, in the longterm, it is impossible to impact upon the global markets, which uncontrollably fluctuate between ‘bulls’ and ‘bears’. Yet, there are issues that impact upon the European energy and energy-intensive industries, which in 2016 can, and need to be addressed,” stressed Marcin Bodio, the CEO of Central Europe Energy Partners (CEEP).
According to Paweł Jarczewski, CEO of Grupa Azoty (CEEP member), once 2016 has arrived, the major challenges in the energy and energy-intensive sectors will not disappear. “The main problem to be confronted is the over-capacity on the fertilisers and plastics markets, mainly from outside the EU. From the macroeconomic point of view, the key topic for 2016 is the uncertain outlook for China, which is the biggest worldwide consumer of goods. The continuing slowdown may limit consumption, which, in turn, may result in an increasing over-supply of goods and pressure on prices. If the current price levels of oil and gas are sustained, this may spark a positive development impulse for the economy, but it will also draw down the prices of our products,” Mr. Jarczewski reflected.
The situation in China also influences the steel market, which is burdened by the huge over-capacity in this country. This means that global markets are currently flooded by cheap subsidised Chinese materials. It has caused steel prices to drop dramatically. “We fully support the need to limit emissions into the air, but all countries should come on board. Otherwise, if the EU
continues to take the lead in those actions, it will only harm its industry, which will no longer be able to compete with other steel producing countries, in which environmental regulations are not so stringent, or do not exist at all,” warned Geert Verbeeck, CEO at ArcelorMittal Poland (CEEP member).
In 2016, the competitiveness of the European energy and energy-intensive industries will be additionally determined by the negotiations concerning the transatlantic trade agreement between the EU and the US. “CEEP supports the underpinning idea of TTIP, which is free trade and a global level playing field. Yet, we also see risks that need to be addressed, if the EU is to remain globally competitive. That is why we opt for a transition period of 10 years for some tariffs, which are particularly important for the energy-intensive sectors, such as fertilisers and petrochemicals, and a bilateral safeguard clause. We also see the necessity of a new approach to the ETS system, which currently brings threats to the energy and energy-intensive companies in Europe. Let the year, 2016, be the time of unshackling these sectors and reviewing those EU regulations that block their competitiveness,” urged the CEO of CEEP.