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 Germany's Latest Wood Pellets Market Report: When to buy wood pellets ?

[Feb 2, 2023]

Pellet prices have moved 2022 to record levels. In January, the prices for wood pellets fell again for the fourth time in a row. A trend ?

According to German media reports: Düsseldorf Heating with pellets continues to gain popularity in light of the energy crisis. According to the German Energy Wood and Pellet Association (Deutscher Energieholz- und Pellet-Verband), 570,000 heaters and furnaces with the energy source were already available nationwide – trend increasing.

Pellet prices, like natural gas, have seen a rally in recent months. Over the course of the year, the price for one tonne in a six-tonne bundle of 366 euros in January rose to 764 euros in September.

Consumers are therefore unsure of what to expect. Why are pellets suddenly so expensive? Will prices fall in the foreseeable future? Is heating with wood and converting to pellet heating even worthwhile? When is the best time to buy pellets? How many tons do you actually need per year? The most important questions and answers at a glance.

Heating with wood: How much does a ton of pellets cost?
One ton cost an average of 499 euros nationwide in mid-January. This is still more than 133 Euro than in the same period last year. However, the pellet price in December 2022 was still 537 euros. The price is falling for the fourth time in a row, as data from the German Pelletin Institute (DEPI), an industry association, show. DEPI regularly raises pellet prices to 15. every month.

Pellet prices: Why are pellets so expensive?

"So far, there has been an oversupply of pellets," explains Martin Bentele, Managing Director of DEPI. There were more pellets than were heated. According to data, German manufacturers exported around 200,000 tonnes last year.

This has also been reflected in prices in recent years. The average annual increase was between 2012 and 2021 at a moderate 0.24 percent, data from the DEPI show. But things were different this summer. Demand was three times greater than supply," says Emil Sopper of the Baywa conglomerate, one of Germany's largest pellet dealers.

More and more consumers are switching to wood heating. "Demand has increased sharply since the war in Ukraine," says Bentele, an expert who believes that consumers are afraid of gas shortages and are hoping for lower heating costs compared to fossil fuels.

"Many existing heating operators are also panicking and are buying in stock," Bentele said. Production cannot respond quickly enough to the increased demand. "Manufacturers are planning more plants, but it takes an average of two years for them to be operational and more can be produced. "Hamster purchases drove prices up even more.

In addition, the high energy prices also make production more expensive. Producing pellets is very energy-intensive," Bentele explains.

Logistics also caused problems. There were no special trucks capable of loading wood pellets into the tank with a built-in vacuum cleaner. We had already ordered ten new trucks last year," says Holzpellet dealer Sopper. Not a single truck has been delivered yet – the truck manufacturer is missing assembly parts due to interrupted supply chains.

When will pellets become cheaper again?

Pellet prices have been falling since October 2022. Wood pellet prices also fell significantly in November and December. The rising trend has stopped," Bentele says. Demand is declining and most consumers' warehouses are filled.

Dealer Sopper also sees sustainable relaxation." We have a functioning market for pellet prices," he says. Demand has fallen as existing customers' warehouses are now filled. "Now new customers or large commercial customers are buying more," Sopper explains.

Source handelsblatt.com