Chemicals maker Clariant unveils contingency plan for gas supply cut

Europe's gas supply crunch is posing a real threat to manufacturers across the continent, with Swiss specialty chemicals maker Clariant the latest to announce a contingency strategy, to deal with an envisaged 30-60% gas delivery shortfall, Reuters reported July 28.

CEO Conrad Keijzer told reporters that Europe's gas supply remained  a "key concern" following further reductions to the crucial Nord Stream 1 pipeline from Germany to Russia, with Gazprom's deliveries now running at just 22% of capacity. Clariant posted a strong set of results for H1 2022, increasing its EBITDA margin to 16.6% from 15.8% yr/yr in the second quarter despite inflated raw material, energy and logistics costs.

Clariant, which has eight German factories that are part of the personal care supply chain, has produced a contingency plan to vary its production plan and move output to different locations if there is not enough gas, and it could also convert some of its gas boilers to use crude oil instead. It will also look at using the national grid for electricity supplies, rather than internal infrastructure. Clariant's chemicals do not use gas a raw feedstock, but it does use gas to produce steam and to produce electricity at larger factories.

"We are focusing on the 30% plan," said Clariant's Keijzer. "The 60% plan is something that hopefully will never be needed.”

Clariant will also struggle if the suppliers of chemicals it uses to make its products fail to source enough gas. Clariant says it was forced to find a backup for its supply chain also, seeking alternative raw material sourcing if its usual suppliers are hit by gas shortages.