Published / Reported by GLOBAL WOOD MARKETS INFO
The price of wood pellets used for heating has tripled on year, and representatives of some companies foresee the risk of possible future wood pellet shortages on the market as well.
Last August, one Euro-pallet of wood pellets with a total weight of nearly 1,000 kilograms cost €150. Currently, however, prices range from €260-420, Briketipoisid chief Argo Kivi told ERR. Prices started to go up last fall already, he said, noting that the price of a pallet of wood pellets had already gone up to €190 last September.
Koit Märtin from Tartu Graanul likewise confirmed that wood pellet prices have gone up threefold.
Graanul Invest marketing specialist Raimo Oinus told ERR that last summer, their company was selling wood pellets to private customers at a retail price of €185 per ton, meaning prices have shot up approximately 150 percent.
“Just like all other fuel prices, the price of wood pellets has soared in 2022,” Oinus said. “The main reason for this is the prices of biomass and electricity, which have increased several times over. These are our primary production inputs and they certainly increase the price of the final product.”
According to Kivi, a broader driver behind wood pellet prices going up is demand increasingly outstripping supply at Europe’s cogeneration plants, but the prices of production inputs going up is contributing as well.
“Not one price is currently stable or predictable,” he said. “The prices of all types of wood have gone up as well, and with them, the price of wood pellets.”
Sanctions imposed on Russia due to their ongoing war in Ukraine have to some extent impacted prices as well, the Briketipoisid chief added.
Märtin likewise stressed increasing input prices as the reason why wood pellet prices have grown, noting that fuel and electricity prices have gone up.
As electricity accounts for nearly half of the price of wood pellets, Tartu Graanul has recently been operating exclusively at night, when electricity prices are cheaper, he said. Fuel prices going up, however, impacts delivery costs for both incoming raw materials as well as the outgoing final product.
Kivi said that his company produces wood pellets from sawdust, but as construction activity and related timber harvesting are both down, they could end up facing a shortage of sawdust from which to produce their product. When major wood industry businesses start heating their own production facilities using sawdust as well, that could worsen a shortage even further, he added.
Märtin likewise acknowledged that the amount of raw material available has decreased. Last August, Tartu Graanul had 10,000 tons of wood pellets in its warehouses; currently, their warehouse is essentially empty, he admitted.
Ulvar Kaubi, director of the Timber Marketing Department at the State Forest Management Center (RMK), said that he nonetheless doesn’t foresee a shortage of raw materials, despite the fact that short-term interruptions have disrupted the security of supply. Heading into the fall, these security of supply concerns should be resolved.
“But there’s not a single factor to be seen that might bring prices down,” Kaubi acknowledged. “Demand is high, input prices have risen and we’re also experiencing pressure to restrict logging.”