Shortage across Europe has become a huge challenge for our house builders but has created an opportunity for Ireland’s saw mills
European market prices for certain timber products are up 35pc as a result of the Ukraine war, causing huge problems for the construction sector but opening new opportunities for Irish saw mills.
Supplies of timber have been constrained because Russia, Ukraine and Belarus were major distributors into the EU, said Mark McAuley, director of Ibec’s Forest Industries Ireland.
Major production cost increases of about 25pc are now threatening to drive up prices for timber products across Europe even further. The industry has been hit by the escalating price of many of its main inputs, including electricity, gas, diesel and special resins mainly produced in Ukraine.
McAuley said: “85pc of the pallets and packaging material in Holland comes from Ukraine and Belarus and that has been cut off. There are whole sections of the European timber products markets now scrambling for supply.
“That creates an opportunity for suppliers here, with operators of new sea routes direct to mainland Europe looking for backloads out of Ireland, meaning Irish timber suppliers can get product to the continent very cheaply.
“But the flip side is areas of construction like timber frame housing face problems. Most of the wood that goes into timber frames is stronger Scandinavian wood, but those supplies are now getting sucked into other European markets to meet demand. We are hoping the industry can begin to redesign how it builds timber frame houses to use Irish timber, but in the short term builders using European wood have an issue.”
McAuley said there are also fears in the industry that consumer inflation will dent demand in the coming months.
“If demand remains strong in the UK and Ireland, timber product prices will increase to reflect cost increases in the next two months, by maybe 25pc. But this is dependent on continuing strong demand.”
Any such price increase will prove hugely challenging to the construction sector, coming as it does on top of record prices for timber products last year.
McAuley said the crisis is presenting new opportunities for the sector after a period in which huge hold-ups in regulatory approvals and licensing for forestry work had created a lot of challenges.
Government planting policies in the 1980s and 1990s mean a lot timber in Irish forests will now start to mature. The volume of timber coming from Irish forests is expected to double in the next 10 years, from six million to 12 million tonnes annually. This would double timber product volumes to about five million cubic metres, said McAuley.
“We expect to add 6,000 jobs to the sector in the next 15 years, from a current base of 12,000.”
The Government is currently undertaking a review of the regulatory system in the sector.
“We’ve yet to see any real results from that. If there continues to be a bottleneck and we don’t reform the system then this is going to undermine the growth of the sector,” he added.