Page 8 - FDMAsia Sep/Oct 2026

6 MARKET BEATS SEP/OCT 2026 FDM ASIA | www.fdmasia.com

www.machinerypartner.com and lignite when burned. The overwhelming recommendation
from experts is to continue using existing pellet boilers until
the end of their service life and to consider heat pumps for
new installations.

Competition with heating plants in Estonia

In Estonia, wood chips are a bottleneck, and pellet producers
are competing directly with heating plants that burn the same
raw material.
a steep upward trajectory. Graanul Invest, Europe’s largest pellet producer, confirms
The German Pellet Institute continues to emphasise the the shortage, with competition driving prices upward. Mart
significant price advantage of pellets over heating fuel and Liivak, head of Harju Puu, estimates the price at about 400
natural gas, but acknowledges that the shortage of sawmill euros per metric ton and expects further increases, noting
byproducts—caused by a weak construction market—has that production is energy-intensive and electricity prices may
been compounded by increases in the minimum wage and rise in the winter.

the cost of diesel fuel. Dependence on wood is significant: last year, wood chips
Residential construction is considered the most problematic accounted for nearly two-thirds of the fuel used in Estonia’s
segment: building permits do not automatically translate into district heating system.
orders, so less wood is passing through sawmills. The Baltic states and Finland have halted purchases of
The Institute advises against delaying purchases for too Russian pellets after 2022. Last winter, demand rose and prices
long, suggesting that the cheaper summer window may close increased by 25 percent; this year’s rush has exacerbated
sooner than usual. the shortage in neighbouring Latvia, where in mid-July sellers

Consumer advocates recommend monitoring the market imposed a limit of two packages per customer and where a
and ordering in advance rather than under pressure when ton cost about 220 euros a year ago.
inventory is low, choosing local suppliers whose supply chain
can be verified, and being wary of fake online stores. A different perspective on the situation in Latvia
The environmental debate remains open. Pellet consumption Latvian producers are currently asking for 300–330 euros per
increased significantly between 2020 and 2025, although the metric ton, including VAT, but the industry expects prices to
pace of new pellet boiler installations slowed considerably after stabilise or decline over the course of the month.
2023: this market is sensitive to changes in support programs. Didzis Paleis of the LATbio biomass association compares
Critics point out that the climate neutrality of wood is the current mood to the period following the 2022 crisis, when

a political interpretation of standards, and that wood has a people bought fuel for the entire winter back in the summer,
greater positive impact on the climate when it is permanently and the buying spree stopped in the fall because they had
incorporated into products rather than burned. already stocked up.
Of the total volume of German sawmill byproducts, The same thing is happening now: many buyers will not
approximately half is used in other materials, while about 3.5 return to the market until spring, which will force traders to
million metric tonnes are converted into pellets. lower prices.
In terms of megajoules, pellets rank between natural gas The assessment of the causes is also fundamentally