The 17-12 home defeat by London Wasps left the Warriors in third spot in Pool 6 with Perpignan on top on try count.
"We are most certainly not dead in the water yet but Friday night is a must win game for us - it is a massive match," said Howells. "The bottom line is that we have to beat Perpignan or we are out.
"A win would mean that, when we go to Calvisano, we will know we are still in the hunt - and I think we will be.
"We showed we could compete with Perpignan when we played at their place but we must get our set piece right.
"We could have won it against Wasps but we lacked a bit of bulk, gave away too many penalties and did not win our set pieces in crucial areas.
"Mick O'Driscoll is back for them up front, centre Daniel Herbert will carry the ball up for them and fly half Manny Edmonds is a great controller of a game.
"Brent Cockbain (hamstring) and Robert Sidoli (groin) could be right for us and that would be a big bonus.
"It was a fabulous crowd at the Brewery Field last Friday night and it would be marvellous if we can get the same turnout for Perpignan. It was an electric atmosphere and the boys really responded to the occasion - it would be great if we could get that on a regular basis."
Celtic Warriors: G Wyatt; D James, S Parker, G Thomas (capt), A Havili; C Sweeney, G Cooper; G Jenkins, M Davies, C Horsman, D Jones, R Sidoli, M Molitika, C Harris, R Parks
Replacements: M Rees, C Loader, B Cockbain, N Kelly, S Martens, N Jenkins, J Bryant
Perpignan: F Cermeno; P Bomati, D Marty, C Manas, D Luger; M Edmonds, J Fillol; P Freshwater, N Grelon, N Mas, C Gaston, V Debaty, L Mallier, B Goutta (capt), M O'Driscoll
Replacements: A Moreno, F Tournaire, G Le Corvec, J Labat, L Loustau, P Giordani, T Stimpson
Referee: Giulio de Santis (Italy)