Influence of rising energy prices on the price of heat treatment

An old-new topic, however very current. According to Česká spořitelna’s analysis, it is possible to count on variants where the price of energy for a commodity will increase 2 to 3 times. Which option is realistic? Because I’m a bad forecaster, I’d rather guess twice. It won’t hurt that much.

Fig. 1 – The overall impact of the increase in natural gas and electricity prices in CZ

And then what happens? Natural gas for CZK 1,537 / Kwh, electricity for CZK 3,917 / KWh. The analyst of Česká spořitelna (the analysis is from January 22, 2022) probably has no idea that this is the current price. The tempering plants have already adapted the pricing policy for 2022 to this. However, it is from this initial base, in contrast to the CS analysis, that double growth can be expected.

Fig. 2 and 3 – Cost structure of the final price for natural gas and electricity

My estimate is that the prices for natural gas and electricity, with an increase of 50% and 100% will be according to the diagram. I also added liquid nitrogen, the price of which depends not only on the growth of the price of electricity, but also on wage inflation, which can be estimated at 10%.

Fig. 4 – Estimated growth of energy prices and LIN in 2022, compared to 2018 (variants + 50% and + 100%)

And how does this affect the prices of heat treatment? With an increase in energy of 50%, this means an increase in the price of heat treatment by 14%, with an increase I consider twice, ie by 100%, then an increase of 26%.

Fig. 5 – Necessary change in heat treatment prices while maintaining the current margin for variants + 50% and + 100% (default data electricity CZK 3.70 / Kwh, natural gas CZK 1.54 / Kwh, and LIN CZK 3 / kg)

April 11,  2022

Jiří Stanislav