European gas prices, which started to rise after the pandemic, gained momentum after Russia's invasion of Ukraine. As the heat seen in the summer period increased the use of air conditioners, it caused an increase in electricity consumption in Europe. Coal and oil transported by the Mavra decreased as a result of the warm air drying up the rivers.
While Dutch TTF natural gas transactions peaked at 339 EUR/MWh in August 2022, falling below 100 EUR/MWh in October of the same year marks a remarkable change for European steel buyers.
The Council of Europe, which aims to store 80% of gas in its member states before winter arrives, has achieved this target before winter arrives. There has been an increase in the number of ships waiting to deliver gas at European ports.
The lower-than-normal level of heating demands and the fact that member states fill their gas tanks at the intended rate increase the expectation that the winter will be mild.
It was observed that rising energy prices caused steel producers to reduce production and imports of steel consuming countries were decreased. The European Commission's pointing to structural reform in energy markets is one of the factors causing downward pressure on gas values.
Compared to pre-pandemic, average gas prices appear to be higher than before the pandemic. Increasing gas prices caused European steelmakers to increase their steel purchase and sale values during the summer period.
It is difficult to determine how much energy is used in factories in Europe due to many reasons such as the difference in the fuel mixtures used and the energy consumed by the factories, raw material quality, and plant efficiency. Despite this complexity, it is seen in the analyzes made by MEPS that falling gas values cause a decrease in energy expenditures.
It is considered that the decrease in gas prices is not permanent and that this situation may change with the arrival of winter and a possible development in the occupation of Ukraine.
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