Remember last year when prices increased dramatically and the supply of wood pellets eventually ran out in early 2018?
...........well the underlying market fundamentals this winter have not changed from last year when global demand exceeded supply. This was mainly caused by a massive 2.9 million tonne increase in demand from the UK and Asia as large power stations burning wood pellets ramped up consumption.
Japan’s KOEN’s Yeongdong #1 conversion in 2017 now consumes 600,000 tonnes of wood pellets annually, which was the bulk of South Korea and Japan’s 1.3 million tonne increase in consumption last year.
Increasing demand was coupled with wood harvesting problems caused by the mild autumn in the Northern Hemisphere.
Domestically adverse market conditions last year were exacerbated with UK ENplus production and supply problems caused by floods, bankruptcies, terrible weather and suppliers generally being 'caught on the hop'.
Hopefully this year stocks will not run out as supplying companies gear up to provide market needs and in general be better prepared. However prices will inevitably rise going forward into the winter given the following facts:
Large power stations find it harder to find industrial pellets so they will probably move into the ENplus market especially in peak winter times.
More power plants burning wood products are coming online. Notably in the UK, Lynemouth Power which is set to consume circa 1.5 million tonnes of wood pellets.
Domestic raw wood product prices have doubled since last year
Asian annual demand for industrial wood pellets is expected to rise to 4.9 million tonnes in 2018 almost 50% higher than 2017. The question is how much Asia will need to import from traditional European markets.
Seasonally demand will increase as the Northern Hemisphere goes into winter.
However its not all bad news for pellet users since last September 2017 oil and electricity prices have risen circa 30% while wood pellet and gas prices have risen circa 15% in the same period.
So how can PelletCo help you mitigate against rising prices?
Either buying now and taking delivery will give you security against price rises and shortages. Alternatively you can now pre-order your pellets at today’s price for payment and delivery anytime up to the end of December. This allows you to secure your supply now at current prices and call on it anytime before the end 2018.
To take advantage of this please ring the office on 08454989020 to discuss your requirements.
