Due to the Ukraine war, around 10% of pellets are missing on the world market. This primarily affects power plants that produce electricity with pellets, but the heating industry is also affected and is feeling the increased demand due to higher prices for imported pellets. Thus, the price of wood pellets is considerably higher in some Western European countries as compared to a year ago.
A high demand paired with high production costs mean that the price for pellets continues to rise. In comparison to heating oil and natural gas, however, pellets extend their price advantage to over 40%. As reported by the German Pellet Institute (DEPI), the nationwide average price for ENplus A1 quality wood pellets is €431.56/t. That is 9.7% more than in the previous month and 95% more than in June 2021 and corresponds to 43.16 cents/kg or 8.63 cents/kWh.
“The upheavals in the energy markets are also clearly evident on the pellet market,” states Martin Bentele, Managing Director of the German Pellet Institute. However, there is no direct connection between the costs of fossil fuels and pellets. Wood pellets are more than 40% cheaper than oil and gas. However, rising electricity and fuel costs have an effect on the production and transport of pellets, making them more expensive. However, the uncertainty of consumers and the associated very high demand is also a reason for the increase in pellet prices, Bentele says.
For Austria, the industry association proPellets Austria also reports a price increase for April: loose pellets cost an average of €367.1 for an order quantity of 6 tons, whereby delivery is not included in the price. Compared to the previous year, the price increase in Austria was 66% and compared to the previous month 9.3%. Heating oil and natural gas are 112.6% and 35.6% more expensive than pellets, respectively.
Swiss industry association Propellets warns of rising pellet prices and recommends filling the warehouse now. Wood pellets for heating are currently in high demand across Europe. At the general meeting of the pellets industry on June 17, it was emphasized how important it is for the Swiss supply that customers fill their warehouses early in order to avoid supply bottlenecks in winter. At the moment it doesn’t make sense to wait for a price drop, as prices are more likely to rise, Propellets recommended this back.
Pellet prices rose again slightly in May 2022 at an average of CHF 473.2 per tonne (EUR 480.23/t). The increase compared to the previous month is a good 1%. However, pellet suppliers from Switzerland report that the wholesalers’ prices are being raised several times a month. However, pellet prices in Switzerland rose by an average of 43% compared to the previous year.
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