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The price of industrial wood pellets, which are used in power generation, have fallen dramatically in Europe this year despite a ban on Russian material, with UK power generators having consumed less than expected<\/span>, market participants said.<\/p>\n Industrial wood pellets were pegged at more than USD 300\/t in early 2023 and close to USD 400\/t in the latter half of last year but were now seen as low as USD 170\/t, according to market sources.<\/p>\n This in part reflected the fact that the UK\u2019s 2.6 GW biomass-fired Drax plant and Czech utility EPH\u2019s 400 MW Lynemouth biomass-fired plant \u2013 both in northeast England \u2013 had contracted excess supply and were now offering material back onto the market, said a European biomass trader.<\/p>\n \u201cDrax and Lynemouth are not running much, which has left a huge hole in demand and has helped with the shortfall,\u201d he said.<\/p>\n This shortfall referred to an estimated 3m tonnes\/year of Russian and Belorussian wood pellets that were exported to Europe prior to an EU-wide ban in the wake of the invasion of Ukraine.<\/p>\n \u201cThe economics are too poor and they\u2019ve contracted more than they need, so have been selling back into the market for two months at least,\u201d the trader said.<\/p>\n \u201c[The two UK plants] can consume 6m tonnes of supply a year, so it has a big impact on the market,\u201d he said, adding an upturn in demand by the two generators could quickly drive prices back up.<\/p>\n But demand on the continent was also weak, with a contact at a Dutch dry bulk terminal \u2013 which handles wood pellets \u2013 noting port inventories were growing due to low consumption levels.<\/p>\n Import decline<\/strong><\/p>\n The UK imported 7.5m tonnes of wood pellets last year, according to Eurostat data, which also showed a 24% drop in imports in January-April this year versus the same period last year.<\/p>\n TSO data showed biomass made up 4.9% of the UK power mix in the first five months of the year, versus 5.6% in January-May last year, according to Montel estimates.<\/p>\n \u201cThe demand for wood pellets at Drax fluctuates for many reasons, including economic incentives and planned outages,\u201d said a spokesman for the Drax plant.<\/p>\n \u201cIt is perfectly normal for demand to differ from market expectation because Drax\u2019s operation is commercially sensitive and information on demand and position is not released.\u201d<\/p>","protected":false},"excerpt":{"rendered":" The price of industrial wood pellets, which are used in power generation, have fallen dramatically in Europe this year despite a ban on Russian material, with UK power generators having consumed less than expected, market participants said. Industrial wood pellets … Continue reading