Energy costs create the uncertainty that weighs on the ceramic industry. In recent years, natural gas prices climbed, and a strong rally in CO2 emission rights followed. This market, criticized by many industry leaders for seeming to swing on speculation and for unclear funding destinations, pushed operating costs higher without a matching rise in tile prices. The result was a loss of competitiveness and a financial gap that many firms still carry.
Reduction
On the upside, emission prices have fallen along with gas, easing costs for tile producers. The European Emissions Trading System (ETS), which has guided the market since 2005, peaked in February last year at 97.04 euros per tonne and then dropped to 51.03 euros a year later. Today, emissions sit around 55 euros per tonne.
The ceramic industry association, Ascer, notes that the 2022 bill for emission rights reached 57.5 million euros. The forecast for 2023 is expected soon and may seem paradoxical: with prices at higher levels than ever, the final bill could be lower. “We saw this in 2022 versus 2021 because production fell,” explains the association. When production declines, gas use drops, CO2 emissions decline, and payments for rights under Europe’s cap-and-trade rules fall as well.
Future
The future path of ETS prices in the coming months will be a key determinant of how much relief the sector can enjoy. Several factors deserve attention. For instance, the current 55-euro level remains well above the 24.75-euro annual average of 2020. From 2020 to 2023, the price roughly tripled, and if one looks back to 2017, the cost was just 5.85 euros per tonne—about a tenth of today’s level.
Another challenge is the free allocations granted to companies each year. When these allowances run out, firms must purchase emissions rights on the market. In recent years the free quotas have shrunk, and expectations point to further reductions in the years ahead.
In 2022 tile production fell by 15%, while CO2 emissions decreased by 12%. In 2023 manufacturing declined even more, by around 21%. Looking to 2024, the aim is to continue lowering costs for the industry by sustaining production and stabilizing the CO2 price per tonne.
The ceramic sector relies heavily on gas, so the price of emissions rights and gas together shape overall costs.
Gas price remains below 30 euros
For months the ceramic cluster tracked gas price movements in Europe’s reference market, TTF. It surged above 300 euros, undermining profitability even as demand stayed robust. Recently, however, prices have settled below 30 euros. Analysts do not expect a short-term rise as winter ends and demand eases across Europe.