As we did last April, we again join proPellets.ch's renewed recommendation to not wait any longer for pellet supply!
Below is the full version of the press release from proPellets.ch.
Beware of rising pellet prices: Industry association recommends replenishing stocks now
Zurich, July 5, 2022
Wood pellets for heating are currently a popular commodity throughout Europe. At the pellet industry members' meeting on June 17, it was stressed how important it is for supply in Switzerland that customers fill their stores in time in order to avoid delivery bottlenecks during the winter. Indeed, at the moment it is not worth waiting for prices to fall, as they will tend to rise.
At the members' meeting, the trade association proPellets.ch presented the results of the most recent market survey. According to the latter, both producers and importers are planning significant volume increases to meet the high demand next winter.
Stock up on pellets now and build large new depots
The huge interest in switching to renewable pellet-fueled heating solutions can only please the industry, but it also presents it with significant challenges. It will be necessary not only to prepare the required amount of pellets, but also to expand logistics. Since the delivery time for special pellet tankers is currently two years, filling the increasing number of customer depots will have to be completed with existing fleets.
proPellets.ch therefore appeals to consumers to replenish their pellet stocks already during the summer months. Shortages can occur in winter due to the lack of silo vehicles.
For new installations, it is recommended that storage facilities be sized to accommodate at least the needs for one year.
It is possible that the price of pellets will rise further
proPelltes.ch notes that customers are still reluctant to place their order for winter supply. The association believes that the current pellet price, which is significantly higher than in previous years, plays a decisive role in this. proPellets.ch and industry associations believe, however, that the price of pellets will continue to rise. Therefore, even from the customer's point of view, it makes sense to order the entire winter supply in time.
The many reasons for the price increase
In May 2021, the price of pellets had reached its lowest level since 2006: 6.9 ct./kWh. Since then it has increased and currently stands at 9.8 ct./kWh. Heating with pellets continues to be significantly cheaper than using gas (13.4 ct./kWh) or heating oil (14.75 ct./kWh; all prices are taken from the FSO's National Consumer Price Index). However, the increase of about 40 percent causes discontent and misunderstanding among some customers.
For this reason, the industry intends to take a stand on the reasons for the higher prices:
- Expansion of pellet production
Prices in recent years were so low that producers made virtually no investments. In the face of high demand, it is now necessary to provide for expansion, the costs of which must be covered by the price of pellets. - Higher energy prices for production and supply
Prices of all energy carriers have risen. This also affects pellet prices at multiple levels: from supply, to production costs to delivery to customers. - Rising costs of raw material
The raw material wood is increasingly in demand. The materials from which pellets are made--mainly dry sawdust, wood chips and other wood waste from sawmills--have therefore become more expensive. Compared with the previous year, prices have risen by more than 60 percent and are expected to rise further. - Shortage on the world market
Due to the war in Ukraine, there is a shortage of about 10 percent of pellets on the world market. This situation mainly affects pellet-fired power plants, but the heating sector is also affected by this shortage and has to deal with this increased demand, which leads to higher pellet import prices. Last year, Switzerland imported 20 percent of sales volumes.
The increase in prices is thus a consequence of several factors. Despite these increases, however, customers continue to enjoy savings of 25-30 percent compared to natural gas or heating oil. The advantages of pellets, however, do not lie solely in price. Heating with pellets is also an environmentally friendly choice that ensures easy operation.
More information on pellet heating can be found at www.propellets.ch