Summer pellet price surge linked to early buying rush, expert says prices may drop in autumn
Latvian Biomass Association head Didzis Palejs says the summer spike in wood pellet prices stems from people rushing to buy heating supplies early, comparing it to a bank run. He suggests demand — and prices — could fall sharply in the coming months.
Didzis Palejs, chairman of the Latvian Biomass Association “LATbio,” explained on the TV24 program “Naudas cena” why wood pellet prices have risen sharply this summer. According to him, the cause is not an actual shortage but consumer behavior: after last winter's experience, people are rushing to buy the pellet volumes needed for the entire next heating season already in summer.
Palejs stressed that Latvia's pellet production capacity and output significantly exceed domestic consumption, so there is no real deficit. The problem arises because a very large number of people try to buy pellets at the same time, creating artificial pressure on the market within a short period.
Compared to a bank run
To illustrate the situation, Palejs drew a comparison with the banking sector: if all depositors wanted to withdraw their savings on the same day, it would create an effect similar to what is currently happening in the pellet market, where many buyers try to purchase the product simultaneously.
Could 2022 repeat itself?
Palejs noted that a similar situation occurred in 2022, when there was strong summer buying activity and high prices. At the time, most Latvian consumers had already stocked up on everything they needed by summer, causing the local market to effectively stall for six months to a year. As a result, pellet prices in autumn — in November and December — were significantly lower than in summer.
Palejs said similar signs are visible again this year, with many people he knows having already secured the pellet volumes needed for winter. He therefore suggested that in a few months the situation could reverse completely, with demand — and prices — dropping as most households will already be supplied with fuel. He acknowledged this is his intuitive impression rather than a guaranteed forecast.
