All signs point to firewood and briquette heating no longer being immune to the effects of the UK energy crisis. Several waves of wood fuel price increases are expected in 2022.
On April 26, one of the UK’s leading online wood fuel suppliers, Lekto Woodfuels Ltd, officially announced a series of upcoming price increases on their products. Several other fuelwood companies had hinted at the possibility of price increases up until then, but this was the first time a concrete statement was made by a major market player.
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The Effects of the Energy Crisis on Wood Fuels
The energy crisis has been both a blessing and a curse for wood fuel suppliers. On the one hand, the demand for wood fuel heating is now higher than it was at any point in recent history. On the other hand, suppliers are having problems with sourcing raw wood material, processing it, and delivering it to their customers.
Increased Demand
Burning firewood has always been the cheapest way to heat a home. Gas and electric heat, however, are much more convenient for most people. But as both of these options became prohibitively expensive, many Britons have started to rediscover log burners.
As a result, firewood suppliers big and small are reporting record sales. How-to articles about the proper use of firewood are getting tons of new traffic. And more UK households have installed log burners this winter than during any other winter in the last 20 years.
Supply Problems
But it isn’t all sunshine and roses for wood fuel suppliers. Record high petrol, gas, and electricity prices have made manufacturing new wood fuels more expensive than ever. And UK-wide labour shortages meant domestic factories and warehouses couldn’t operate at full capacity. This, coupled with the increased demand, means that suppliers have difficulty maintaining stock. And what stock could be found, has to be purchased at vastly inflated prices. Despite all of this, the industry managed to maintain low product prices by increasing the import of cheap firewood from Eastern Europe.
But all of this changed in February of this year. Supermarket shoppers have already felt the effects of the Russo-Ukrainian war on the prices of grain, salt, and sunflower oil. This is because Russia, Belarus, and Ukraine made up a disproportionately large portion of the UK’s imports of those product categories. And the same is true of wood fuels. If you ever bought cheap firewood at your local supermarket, chances are you were burning firewood from one of these three countries. And with all these imports gone from the UK market, prices will go up.
Will There Be Wood Fuel Price Crisis?
Industry experts generally agree that UK households can expect a noticeable price increase, but an outright crisis seems improbable.
Once the price of wood fuel reaches a certain level, it will become financially feasible for wholesale suppliers from other parts of Europe to enter the UK market. This will increase the total supply of wood fuel products in the UK and limit the effects of the price increase. We can also expect an increase in domestic wood fuel production.
How Much Will Firewood Prices Increase?
There is no expert consensus on how big the price increase will be. Some analysts say that the year-on-year price increase may be as low as 30%. Others believe prices can increase twofold.
To safeguard against sticker shock, wood fuel suppliers are likely to increase the prices in several waves. According to Lekto’s article, the first wave will likely occur in May.
Buyers have already seen the prices of wood pellets jump between 50% to 60%. However, experts say the May increase in the price of firewood and briquettes will not be as severe.
This is because wood pellets are usually sold at extremely low margins. Firewood suppliers, on the other hand, can lower their sales margins and attempt to compensate for this by increasing their total sales figures. A more probable first wave price increase figure is around twenty to thirty per cent.
