Austrian wood panel company, Kronospan, has launched a warning over the future of its business in the United Kingdom, with fears that biomass plants are fueling increases in timber prices.
Representatives of the company, quoted by the British newspaper, say that the UK has seen a 10% surge in timber prices only in the first quarter of this year, with a price doubling recorded in the past 10 years. Thus, Kronospan’s plant in Chirk, Wales has already reduced exports, as market conditions are fierce and the competition with Central and Eastern Europe is very strong.
There are also concerns that the UK market will now be invaded by cheaper imports, which could ruin Kronospan’s business. The company is asking the UK government to act against subsidies on biomass, which are the main cause for the high wood demand and the price increases.
Chris Emery, timber procurement executive at Kronospan, said to the Daily Post: ‘This is a big concern, certainly at managerial level there is real concern over this. We have seen a 10% increase in the price of roundwood since the start of the year and the price has doubled over 10 years. The recent rises have thrown us because it had been a mild winter and we did not expect the biomass demand to rise so strongly. It is the small scale operations that are a concern because it is hard to keep track on them. We need to speak out about this now and Government needs to take action, we need action to keep it viable.’
Chris Emery stated that the combination of biomass and growing building market are now causing the problem. ‘This (price rise) is because of the increase in demand for timber for use in biomass because of the subsidies that have been on offer. This has been around over a number of years but it is now that we are seeing sharp increases in prices because of the upturn in the housing market. We have had to be more efficient and at present we can still compete on price in the UK market but over the last two to three years our export market has gone because we could not compete. This had been 10% of our business. We are still holding up in the Uk but there are concerns over imports, especially from Eastern Europe where costs are lower. It would only take a change in the exchange rate to see an influx of imports to the UK. That would have a major impact on us’ Mr. Emery added.
Kronospan thinks that the subsidies for biomass should be given under different conditions, only for end-of-life wood, wood that can’t be used for anything else.