European wood pellet prices have rebounded in the last six months after a prolonged and challenging period of bearish pricing for pellet producers. The market witnessed bankruptcy from well-established suppliers in Europe and North America as pellet prices drifted towards unsustainable levels for many in the industry. That outlook started to turn earlier this year with the arrival of stronger demand from Europe and Asia, coupled with lower pellet production output helping to push prices higher. European utilities and generators benefited from the cheap pricing but there was a mutual realization on both sides of the market that prices had to increase before the market lost more suppliers to bankruptcy.
Since the turn of the year delivered spot prices to Europe have firmed by over USD$40 per metric tonne to put the market on a firmer footing. Strong demand from Belgium, the UK and Denmark played a key role, coupled with the news that RWE and Uniper would require 3mn tonnes of pellets for the Netherlands, and Lynemouth and MGT are both progressing in the UK.
The ever-developing markets in Japan and South Korea have added to the positive sentiment, with a buoyant Korean spot market and lengthy list of new projects in Japan adding to global demand.
In the wood chip market, strong demand from Hofor and Dong Energy puts Scandinavia at the forefront of this evolving market with expectations of Danish demand for wood chips set to reach 2mn tonnes by 2019.
