Opportunities for Pellet Trade in Europe

Aims of the work 

The potential for pellets trade in Europe was researched and assessed. Such trade is of key importance for the development of a European pellet market in supply, demand, price and quality standards. Such a market would not only increase the competitiveness of pellets in Europe, but also support the creation of new markets which through imports/exports in their early development. The four areas evaluated are illustrated in the figure.
 
Figure 1 : Factors influencing EU-wide pellets trade

Main results and conclusions

Three target markets were taken as case studies for the trade assessment: Greece, Spain and Italy. All three markets stand to profit greatly from international trade. These are all young markets with small or (in the case of Greece) no domestic pellet market. For these markets, pellet imports could supply the basis for the development of a domestic boiler market. At the same time, pellet exports would allow the planning of larger pelleting installations. The following table gives the added cost of exporting pellets.

Table 1 : Cost of international trade in Euros per ton

These figures underline the viability of pellets trade. Whilst these additional costs amount to some 10-20% of the pellets price, they are viable, especially for new markets and “peaks” in the demand/supply of established markets.

 
Table 2: Estimated prices of exported/imported pellets

The research results highlight the growing importance that international pellets trade will play in the coming years. This is of particular interest when considering different production costs and niche markets (such as “industrial pellets” for large-scale applications.

To ensure the effectiveness of such an international market we require: An EU pellets exchange where commodity prices are fixed and negotiated; a “multi-standard” market to allow for a differentiation between domestic (high quality) and industrial (low quality) pellets markets; a coordination of supply and demand through supplier-consumer networks- especially for largevolume production/consumption sites.

Pellets trade is also a question of high interest for the new member states and countries of Eastern Europe. Many of these countries have huge un-tapped wood resources and low production costs. This would allow the establishment of pellet markets in these countries, initially based on pellets exports to Western Europe.

The comprehensive report on this topic  can be downloaded here.