The hopes and attention of the European wood panel industry are focused on the Trilogue to be held in September in Brussels. After the deadlock following the European Council meeting in early summer, Italian and European companies continue to ask the EU to exclude urea from the materials subject to the CBAM.
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Introduced last January 1st, the Carbon Border Adjustment Mechanism is an EU regulation that introduces a tax on imports of raw materials and semi-finished products that, to be produced, generate high amounts of CO2. Among these is urea, a derivative of natural gas mainly used in agriculture as a fertilizer (for 85%), but also in the panel industry as a base for the production of glues.
Estimated price increases for urea
The CBAM entails an estimated price increase between 40 and 60 euros per ton for each year of the transition phase and, at full operation, a cumulative impact rising to about 160-240 euros more per ton over four years. Not to mention the volatility of the urea price itself, subject to that of gas and thus frequent supply crises: just think that, following the closure of Hormuz, the price doubled in just two months, reaching 900 euros per ton in April, as explained by Paolo Fantoni, president of Assopannelli, the association of FederlegnoArredo representing companies in the sector in Italy. «For this reason, we continue to ask the European Union to exclude urea from this regulation – Fantoni specifies -. It is a request we are pursuing together with the European furniture association, Efic, because the impact of these price increases is already being felt throughout the supply chain and therefore also on furniture companies. And we are trying to involve agri-food companies, also penalized by this measure».
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The impact on the entire supply chain
The increase in raw material, and therefore the price of glues derived from it, has already led to significant increases in production costs for panel companies, which have partly absorbed these increases by reducing profit margins, partly raised price lists, in some cases specifying that the increases are additional costs related to CBAM, hoping to be able to eliminate it in case of favorable measures by the EU. But the widespread feeling is that this is not enough and that, from autumn, further price list increases will be necessary to offset the increase in production costs, also due to the rise in gas and transport prices following the crisis in the Middle East. All this, companies worry, in a market context that is certainly not favorable.
The companies’ alarm
«The risk is compromising the competitiveness of the entire supply chain, which is also a flagship of Made in Italy, with furniture companies exporting worldwide – observes Stefano Saviola, CEO of the Saviola Group which, in addition to producing panels, also has a chemical company producing glues -. And all for a measure born from a just and shareable intent, namely to reduce CO2 emissions, but as applied it could put our industry in crisis». The company has estimated that the increase in panel production costs, for the part related only to the introduction of CBAM, has so far been 3%, with a 50% loss of margin. From September, therefore, «we will have to do more, because tensions on the price of urea continue, also due to the war in Iran, and we cannot do more than this to absorb the increases», adds Saviola.
