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German pellet prices soften

18 Mar 2016 14:49 GMT
German pellet prices soften

Berlin, 18 March (Argus) — German domestic wood pellet prices fell by 1.1pc in March from a month earlier, and by 6.4pc from March 2015, according to German pellet association DEPV.

The average German retail pellet price softened to €239.56/t in March, having remained broadly stable at around €242/t in January and February. The insolvency of dominant domestic producer German Pellets continues to have no effect on the market. "The best proof of this is the stable price," DEPV managing director Martin Bentele said.

An increase in oil prices as well as the softening pellet price has narrowed wood pellets' premium to heating oil. Heating with pellets costs around €0.048/kWh, 9pc more than around €0.044/kWh for heating oil, whereas in February pellets were 22pc more expensive. But heating with pellets was around 17pc cheaper than with heating oil in March last year.

As the differential between heating with wood pellets and with heating oil narrowed, and then reversed, DEPV in October began drawing attention to wood pellets' price advantage compared with heating with natural gas — pellets are 25pc cheaper this month, a similar differential to February.

Weak oil prices and relatively mild winter weather have continued to keep a lid on pellet demand and on consumer investment in pellet heating systems.

The DEPV index includes all costs and taxes and is based on 6t deliveries of premium pellets. Premium pellets for the residential market account for 99pc of Germany's pellet market as industrial demand is not subsidised under the country's renewable energy law.