Wood pellet prices begin to fall, though slower than expected

Demand for wood pellets is starting to decline in both export and domestic markets, according to Didzis Palejs, chairman of the Latvian Biomass Association (LATbio). He noted the market situation is improving, though not as quickly as he had predicted a month ago, when he expected a sharper price drop. Producers closest to Riga are expected to see a more significant price decrease around mid-October.

Prices and availability

Producers currently sell pellets for €290–320 per tonne excluding VAT. Prices at both factory gates and retail stores are falling, and availability has improved compared to summer, though queues persist at some producers. Palejs said consumers have started buying less. Demand from Poland is also weakening — export prices there have dropped from around €350 to about €300 per tonne excluding VAT, though exact figures vary by producer.

Raw material struggles

Many producers face raw material shortages, as wood material costs have risen faster than pellet prices, making purchases financially unviable without operating at a loss. Weather conditions hindering timber harvesting in forests add further strain, particularly affecting producers of industrial pellets who rely on lower-quality roundwood, such as decayed logs or unsuitable species.

Electricity price concerns

Producers are also worried about a potential rise in electricity prices, which would increase production costs. Additionally, high electricity prices in export markets push cogeneration plants to operate more intensively, raising their pellet consumption and creating extra demand that could complicate market distribution.

Still, Palejs stressed that Latvia should not face pellet shortages this winter, since most households already stocked up during summer. LATbio was founded in 2008 to promote the production and use of biofuel, including wood, and to represent the industry's interests.