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Germany: Pellet prices falling faster again - price slump surprises pellet buyers
[Mar 11, 2024]

Prices for wood pellets are falling faster again after a more stable phase. The speed and extent of the price decline are unexpected, even for many pellet experts. In southern Germany and Thuringia, the pellet price has fallen to €260 per tonne in some cases. This was last seen in November 2021.

Pellet prices in Germany continue to fall at the beginning of March. The pace of the price decline has increased again. The national average price of wood pellets on the trading platform heizpellets24.de is €280 per tonne this week. On the holzpellets.net platform, it is €5 more. That is just under €10 less than a week ago and €20 less than four weeks ago. In. Compared to last year, wood pellets now cost 80 euros less per tonne. That is a price drop of around 22 %.

At the same time, wood pellets now cost around the same as they did in November 2021, i.e. before the war in Ukraine. In addition, pellet prices have now fallen below the €300 mark in large parts of Germany. heizpellets24.de listed the highest price on 6 March at €293 per tonne in Saarland. At holzpellets.net, some prices are still above 300 €/t. The highest mark of 308 €/t is set in Schleswig-Holstein and Hamburg.

Pellet prices fall lower than expected

In southern Germany and Thuringia, the €260 mark is now even in sight at heizpellets24.de. At holzpellets.net, the lowest mark of €270 per tonne is around €10 higher. Pellets experts had assumed that prices would fall in spring 2024. However, the fact that the price drop is happening so early and so sharply is a surprise. In their last forecast, the market observers at Heizpellets24 had expected pellet prices to fall to between €270 and €275 per tonne in the course of 2024. However, this level is already being undercut in some federal states.

"Even lower prices or a return to the familiar two-hundred euro level" have not yet been considered likely by the market experts at Heizpellets24. Looking at the recent accelerated price decline, a further fall in pellet prices seems anything but unlikely. In normal years, pellet prices do not actually fall until the end of the heating period - i.e. at the end of March or April. This year, the price slide started much earlier. If prices follow their usual pattern and reach their lowest point in April, then much lower prices are possible than previously expected.
Oversupply and weak demand depress pellet prices

However, traders and market observers also cite reasons that speak against an even greater fall in pellet prices. The experts at Heizpellets24 cite, for example, the rise in wages, the still high energy prices and the significant increase in transport costs. Added to this are the significantly increased costs for manufacturers and dealers due to inflation and higher CO2 taxes as well as the lorry toll.

And there is another factor influencing demand: pellet consumption by private and commercial heating system owners is significantly higher than in previous years. Since 2021, the number of pellet heating systems in Germany has increased by around 60 % to almost 800,000. This means that the domestic growth in pellet production is also offset by significantly higher domestic consumption. However, the experts also say that domestic production still significantly exceeds consumption. In addition, plenty of pellets are also flowing into the comparatively attractive German market from other European countries.
Pellet heating systems: Hope for improvement

The experts at heizpellets24 assume that the installation of pellet boilers will increase again in 2024 following the halving of the installation figures last year. The reason: Following the temporary stop in subsidies, state grants for wood heating systems are once again available. In addition, heating with pellets is still cheaper than with other energy sources: However, natural gas and heating oil have also recently become significantly cheaper and the price advantage of pellets is no longer quite as great - but still exists.