War is Changing Wood Pellet Market Dynamics in Europe
By Håkan Ekström
Forests2Market Blog
November 9, 2022
The international trade of wood pellets has increased yearly for over ten years thanks to growing demand in Europe and Asia. Although shipments in the first half of 2022 were practically unchanged from the same period in 2021, an anticipated increase in demand in Europe in the second half of the year is likely to make 2022 another record year of close to 30 million tons shipped worldwide. The most significant change is the rising demand in Asia, with Japan and South Korea. The UK, Denmark, the Netherlands, Italy, and Belgium continue to be the major import markets… [but] Russia’s war in Ukraine has shaken up the European wood pellet market. Pre-war shipments from Belarus, Russia, and Ukraine totaled about 3.5 million tons in 2021, about 30% of total imports to the continent or just over 10% of the total consumption.
One consequence is that prices for wood pellets and firewood have increased to unprecedented levels. In some markets, professional firewood companies and pellet producers pay more for small-diameter logs than pulpmill and panel manufacturers. The increase in energy wood coincides with pulpmills running at high operating rates to take advantage of record-high prices for market pulp. The tumultuous energy market in Europe brought wood pellet prices in the second and third quarters to levels never seen before. In Austria and Germany, residential prices were nearly three times as much as in August 2021. It is rare to see price jumps during summer, so this year’s increases are highly unusual… all because of the uncertainty of energy supply and pricing this coming winter.