The European market prices for certain timber products have risen by 35 percent as a result of the Ukraine war, causing great problems for the construction sector but opening up new opportunities for Irish sawmills.
Timber supplies have been restricted because Russia, Ukraine and Belarus are key distributors into the EU, said Mark McAuley, director of Ibecs Forest Industries Ireland.
Large increases in production costs of around 25 percent are now threatening to drive up prices for wood products even further across Europe. The industry has been hit by the rising prices of many of its key inputs, including electricity, gas, diesel and specialty resins, which are mainly manufactured in Ukraine.
McAuley said: “85 percent of the pallets and packaging material in Holland comes from Ukraine and Belarus and that has been cut off. Whole parts of the European wood products markets are now fighting for supplies.
“This creates an opportunity for suppliers here as operators of new sea routes are looking directly to mainland Europe for backloads from Ireland, meaning Irish timber suppliers can bring product to the continent very cheaply.
“But the downside is that areas of construction like timber frame houses face problems. Most of the wood used in wooden frames is heavier Scandinavian wood, but these supplies are now being sucked into other European markets to meet demand. We hope the industry can start to redesign timber frame house construction to use Irish timber, but in the short term builders using European timber have a problem.”
McAuley said there are also concerns in the industry that consumer inflation will weigh on demand in the coming months.
“If demand in the UK and Ireland remains strong, timber product prices will rise by perhaps 25 per cent over the next two months to reflect cost increases. However, this is dependent on continued strong demand.”
Any such price increase will prove to be a huge challenge for the construction sector as it comes on top of record wood product prices last year.
McAuley said the crisis offers new opportunities for the sector after a period when huge delays in government permits and licenses for forest work have created many challenges.
Government planting policies in the 1980s and 1990s mean much of the wood in Irish forests is now beginning to mature. The amount of timber from Irish forests is expected to double over the next 10 years from six million to 12 million tonnes a year. This would double the wood product volume to about five million cubic yards, McAuley said.
“We expect to create 6,000 new jobs in the industry over the next 15 years, up from 12,000 now.”
The government is currently conducting a review of the regulatory system in this sector.
“We haven’t seen any real results from that yet. If there continues to be a bottleneck and we don’t reform the system, it will undermine the growth of the sector,” he added.
https://www.independent.ie/business/irish/timber-price-up-35pc-with-further-rises-likely-due-to-war-pressure-41533611.html The price of timber is up 35 percent, with further increases likely due to war pressures