At the same time, board makers are facing what has been described as “terrific pressure” to reduce selling prices which added to energy costs could even jeopardise the future of some mills.
” It is difficult for mills as unless they want to pay for the gas 100% in the forward market, they are having to buy some gas in the short term.“
– David Gillett, CPI
David Gillett, head of environment for the Confederation, which represents all sectors of the paper industry, said that mills had seen a “steady and unpredictable rise in the price of gas of at least 50% over the last 18 months.”
He explained: “Prices are now being set in the UK market as a result of drivers which are not related to the day-to-day usage of gas. It is difficult for mills as unless they want to pay for the gas 100% in the forward market, they are having to buy some gas in the short term.”
Efficiency
Ironically, the sector has made phenomenal improvement in energy efficiency in recent years with the introduction of gas-fired combined heat and power plants. Now, said Mr Gillett, it would make more sense to burn something else.
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The CPI has joined other energy intensive-user industries in talks with the Department of Trade and Industry over the future availability of energy. The Confederation wants government to recognise that the UK today doesn't have the confidence of ample supply as it did in the case of the North Sea.
And, some in the paper industry consider that the UK can be disadvantaged because of the way the UK market operates compare to some markets for gas on the Continent.
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