Recovering from Covid-19 is going to be a long journey for businesses involved in the waste wood sector, delegates attending the Wood Recyclers’ Association summer meeting were told this week.
Industry experts predict the fallout of the immediate decline in waste wood raw material when lockdown was announced in March, combined with an already tight marketplace for the UK’s waste wood requirements, will definitely affect the sector for the next 12 months and could have a longer term impact for two to three years ahead.
Vicki Hughes of Enva Wood Recycling, Mark Hayton of panel board specialists Egger UK and Richard Coulson from energy supplier RWE all gave their views and predictions on the market place post Covid at a webinar organised by the Wood Recyclers’ Association (WRA) in conjunction with CIWM, on Wednesday (June 3rd).
Members of the WRA also heard from Lauma Kazuša of Suez Trading Europe, who said every country in Europe had faired differently depending on when they went into and were coming out of lockdown, and the measures they had put in place during it.
The webinar heard that within ten days of lockdown on March 23rd, there had been an 80-90% reduction in inbound waste wood onto recyclers’ sites in the UK, with many recyclers taking advantage of the Furlough scheme to support their businesses. However things were improving now with the majority seeing feedstock levels returning to 50% or more.
The lift for wood recyclers began slowly at the beginning of May when HWRCs began reopening. A poll taken during the webinar on Wednesday showed HWRCs are a major supplier of waste wood, with 82% of recyclers receiving wood from this source. Even though this has improved supply, heavy restrictions and some HWRC sites not segregating waste wood is still significantly affecting volumes coming through.
Vicki Hughes, Group Business Development Director for Enva Wood Recycling, said: “If we look at the two potential scenarios for the sector over the next 12-18 months, we think possibly the best case will be a shortage of just less than 0.4 million tonnes of waste wood. However, in the worst case this could be significantly higher.”
Mark Hayton said the impact of Covid on the panel board industry was the biggest in its history, with order books collapsing overnight. The mixture of housebuilding output in March being 6.4% lower than in February and 10.8% lower than in 2019, together with retail sales of construction products falling by a record 18.1% has had a massive impact on panel board requirements.
All UK plants started a progressive shut down in April, resulting in a huge number of staff being furloughed.
Mark said “Although the industry gained orders from the building of the Nightingale Hospitals during lockdown, and (unfortunately), an increase in demand for panel board from the funeral sector, it will be a slow return to normality for the industry and sales orders are expected to be low for several months yet.”
Richard Coulson, Deputy Chair of the WRA, said Covid had resulted in normal contractual supply to biomass plants being 60% lower at the start of April than usual, although there were big variations between suppliers and some were significantly lower.
He said some plants had cancelled planned outages due to European specialists being unable to travel and instead ran at a reduced load. Others who were short of fuel had been forced to switch off, and some had managed to change the fuel mix and imported both virgin and waste wood.
“The next 12 months are critical,” said Richard. “If there is a second peak of Covid-19 or a recession, the reduced economic activity could result in the impact on our sector being felt for another two years or more.”
Lauma Kazuša of Suez Trading Europe, told delegates that the economic lockdown had created a new market environment, with the impact varying across Europe due to the differences in the severity and length of closures caused by national lockdowns.
She said significant volumes had been lost which could be an issue for months to come, until the markets find a new equilibrium.
Going forward, Lauma said there would be a gradual and slow recovery of collections activities which would lead to lower incoming volumes. Europe was not as short so imports could be a major opportunity, although this will not be an easy option especially for those new to the TFS (Trans-frontier Shipment) process.
“Agility and flexibility is required to maximise the benefits from the immediate market gaps and the short/mid term market trends, and minimise risks caused by uncertainty,” she added.
Andy Hill, Chair of the WRA, said: “ This was our first ever webinar and we felt it went really well. I’d like to thank all our presenters for taking the time and putting this information together for us at this crucial time. I’d also like to thank CIWM for helping us to organise the meeting and our members for supporting us by attending.”