The Netherlands struggling due to rising Gas prices amidst Russia-Ukraine conflict

The Gas prices in Europe have been exponentially mounting and leading to an energy crisis in Europe due to the European Union’s dependency on Russia for 40% of its gas and oils. Most European countries have taken a stand against Russia on the ongoing Russia-Ukraine war which may worsen the condition of European oil and gas industries and may lead to skyrocketing of gas and its derivatives prices.

The prices of Methanol in the Netherlands are rising since the high prices of Upstream Natural gas in the country is an all-time high. The price hike of Natural gas in the Netherlands can be traced to the inflated prices of gas in the United States because they are the largest natural gas exporter to the country. The Netherlands imports natural gas largely from the US and Russia, and the current ongoing war between Russia and Ukraine has made trade between Russia and Europe difficult. The inventory of Methanol is very low due to the truncated supply of Upstream natural gas.

While the production of Methanol has been dull due to high prices of the feedstock (Natural Gas), the demand for both Methanol and upstream Natural gas in the Netherlands is high as usual (The country depends on gas for energy) and demand from the downstream home improvement (paints, plywood, subfloor) industries have increased as the industry is quite upheaved in the Netherlands at the moment.

As per ChemAnalyst, the rising price trend of Methanol in the Netherlands is likely to prevail, the demand may cool down in the upcoming months, but the future of production is highly unclear due to the war. Netherlands being a member of NATO wants to impose heavy sanctions on Russia for their attack on Ukraine and Russia is most likely to stop their trading with the Netherlands to retaliate against the sanctions, which will worsen the conditions of the Methanol market in the Netherlands.