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[January 2006]
British Ceramic Industry Demands Government Action on Gas Prices
The British Ceramic Confederation (BCC) has made the strongest representations to the British Prime Minister stating its parallel concerns about the security of gas supplies and pricing, which BCC says currently threaten to undermine the competitiveness and viability of much of the ceramic industry.
BCC says that the UK's dysfunctional gas market has led to severe price shocks affecting the ability of British ceramic manufacturers to compete. The extraordinary prices experienced in the weeks leading up to Christmas resulted in production being curtailed even before the peak winter demand period had begun, notably with major brickmakers throughout the UK announcing longer than normal shut-downs.
BCC is warning that a continuation of that scenario will result in a permanent and irrevocable loss of capacity within the UK and have a major impact on employment prospects in the industry.
Market forecasts suggest that further price shocks are inevitable over the coming months and that compulsory interruptions of firm industrial gas supplies will remain a threat for the remainder of the winter, if not beyond. The material risk of interruption of gas supplies in the event of prolonged cold weather is a particular concern to ceramic companies, given that they require gas either continuously, or for a number of days, in order to switch off safely. Failing to allow kiln firings to continue to the end of their cycles will inevitably lead to the rejection of product because processes have not been completed.
BCC acknowledges that the Government has tried both to encourage liberalisation in the European energy markets and to persuade the European Commission to investigate whether gas supplies are being withheld. However, BCC says it does not believe that actions arising from these initiatives will, on their own, be sufficient to restore functionality to the gas market in the medium term. In concert with other major industrial partners in the Energy Intensive Users Group, BCC argues that full EU liberalisation will take many years to be achieved - perhaps as long as a decade. It is pressing the Government to consider transitional arrangements to enable the market to deliver adequate security of supply in anticipation of the hoped-for liberalisation and the proper functioning of the gas market.
ENDS