In some parts of Germany, pellet prices have already fallen below 300 €/t. This situation has not been seen for two years. At the end of November, wood pellets in Germany cost on average just over 300 €/t. A fall in pellet prices in the middle of the heating season is atypical, though it should be noted that prices could potentially fall even further.
At the end of November, pellet prices in some German federal states dropped below €300 (the lowest pellet prices in the last two years). There is still no sign that the price drop is likely to stop. On the contrary, contrary to forecasts, the decline in pellet prices accelerated in November, with this trend continuing into the second half of November.
In the last week of November, wood pellets in Germany cost on average around 305 €/t, according to experts from the trading portal heizpellet24.de. This is €35 less than four weeks ago. Compared with the last price peak at the beginning of July, when pellet prices briefly exceeded the €400 mark, they are now 95 €/t lower.
On the holzpellets.net platform, the average pellet price is slightly higher – approximately 318 €/t, with no prices below €300. The existing trend remains unchanged: prices continue to fall. However, holzpellets.net does not see any further downward potential, partly due to the increase in sawdust prices.
Pellet prices fall to a two-year low
Pellet prices have reached their lowest level of the year (the previous one was reached at the end of April), costing the same as they did in December 2021. In some federal states, prices have fallen well below €300. A few weeks ago, German pellet market experts did not believe that the previous annual low could be reached. Now, those doubts have vanished: the heating season has begun, and prices are continuing to fall. This is, of course, a good signal for consumers. Using pellets for heating means security, as a local energy source is being used, which is also confirmed by production volumes in the third quarter of 2023, explain specialists from the German Pellet Institute regarding the price drop.
Another reason could be the fact that, viewed in the long term, pellet prices are still relatively high. According to DEPI data, up until 2021, the average annual wood pellet prices hovered around 240 €/t. DEPI pointed out that the monthly average price in November was approximately 350 €/t, which is more than €100 higher. Even with an appropriate inflation surcharge, an average price consistently below €300 seems realistic.
Fall in wood prices and very high supply
There are no signs to suggest the end of this unusual price drop. A significant reason for the prolonged low pellet prices is likely the sharp fall in the prices of wood and wood by-products, which continues to affect heating pellet prices and will, in all probability, “continue” to reduce them. Furthermore, domestic wood pellet production, which increased significantly last year, clearly still exceeds domestic demand (which has also risen), pellet experts believe. All this puts significant pressure on pellet prices, preventing them from increasing or significantly slowing their rise. Customers, understandably, expect prices to continue to decrease.
Many customers have very well stocked their reserves, so despite the attractive prices, they are not yet active in the market again. Many new pellet heating system owners, who have commissioned their equipment since August 2022—when a boom in funding applications was observed—have also finished their initial stockpiling, explain German pellet market experts regarding the price drop. Finally, it is important that many customers established their pellet reserves earlier, which further reduces the volumes currently being purchased.
Pellet market experts point out that, given the persistent downward trend, another group of customers is becoming active in anticipation of even cheaper pellet prices, in order to benefit. In some federal states, such as Bavaria, Baden-Württemberg, Hesse and Schleswig-Holstein, wood pellets are cheaper than 300 €/t, while in other German states the price is only slightly higher. The most expensive wood pellets are in Bremen and Lower Saxony – 320-332 €/t.
German pellet market experts point out that the most expensive pellets are in Bremen, Lower Saxony and North Rhine-Westphalia, where prices range from 355-360 €/t. The lowest prices are in Hamburg, Schleswig-Holstein and Bavaria, with the price of pellets in each being slightly over 308 €/t.