The costs of industrial wood pellets imported to the key European markets increased in 2022. Still, the rises have been less dramatic than those for residential wood pellets, partly due to longer-term supply agreements with US pellet producers. Over 70% of the European import volume has been shipped to four countries in 2022: in descending order they are the United Kingdom, the Netherlands, Denmark, and Belgium.
Import prices have gone up the most in Denmark (+64%) and Belgium (+46%) the past year, driven by the boycott of supply from Russia, a supplier that historically has had among the lowest-priced pellets (see price table below). Instead, Denmark has increased its deliveries of high-cost pellets from the US. Belgium imports have followed the same pattern, with the Russian market share falling from 74% of total import supply in the 3Q/21 to 0% in the 3Q/22, while the US share has gone up from 32% to 50% during the same period.
Russia’s invasion of Ukraine has resulted in a sharp decline in shipments of pellets from Belarus, Russia, and Ukraine. As a result, the total volume from the three countries is likely to fall an estimated 35% in 2022 y-o-y. Simultaneously, US pellet producers have increased their shipments to Europe, with 2022 volumes estimated to have reached a record 8.6 million tons, up from 7.4 million tons in 2021.
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