Winter is over – 18th April tomorrow 22 degrees forecast!
Been a busy few months of consistent demand of woodchip due to a duration of cold weather and two brutally cold snaps. We now enter spring/summer demand for wood chip will significantly reduce – this is timely as the demand has outstipped supply of logs/raw maerial. Prices for raw material have risen as much as 30% in some areas and seemingly overnight but the warnings signs have been there all winter. I will set out why I think this is happening and what the mid term forecast looks like.
Now all the biomass boilers are in place the demand for woodchip is strong the demand for roundwood timber and sawmill residue is high. Pallet companies are fighting for the same low grade
wood and this has increased prices. Sawn log has seen sharp prices rises and again demand has outstipped supply. A biomass boiler receiving 9p kWh on Tier One is in a healthy position to pay for woodchip and therefore the biomass market is in a strong position to pay for increased prices.
Due to snow and rain – access to the forests has been very difficult to extract product to roadside so therefore the timber is there we are told it is just the access to cut it down and extract it.
The Forestry Commission has in some areas cancelled all contracts and hiked prices to unprecedented levels – call me a cynic but is there a plan at Whitehall? Mr BOSS of BEIS looks at all the RHI payments going out and trots over to the other side of building to speak to Mr BIG of the Forestry Commission and requests prices become more competitive so at least the Government can trawl back some RHI jam – just a thought!
Another price rise factor which again is clever act from our Friends in Westminster is stopping the burning of Grade A, B, C or D timber/woodchip in Non WID compliant boilers. In the market so far we are yet to hear of local EA officers shutting sites down but as resource is made available I am sure this new rule will be enforced. It is a very clear directive that no waste wood can be burnt in woodchip boilers that do not have installed emissions abatement technology.
So it is not just one factor and then there is the pellet market which has also seen a troublesome winter – Verdo now back in business, Latvian mills closed due to flooded forests and access to stock.
Summer is coming time to relook at plans, asses stock levels and ultimately speak to customers to ensure they are aware of the price changes in the market. What goes up must come down…….surely.