European wood pellet imports drop 1.5mn t in 1Q23

Combined European wood pellet imports fell by 1.5mn t on the year to 3.7mn t in January-March, mostly because of lower pellet-fired generation in Denmark and the UK.

Imports by the two countries dropped by a respective 605,000t and 442,000t year on year in the first quarter of 2023, to a combined 1.9mn t. Significant decreases were also seen in Dutch and Latvian imports over the same period ( see table ).

UK pellet burn for power fell to 1.7MW on an hourly average in January-March, from 2.1GW a year earlier. This is equivalent to 500,000t of wood pellets, assuming 40pc efficiency, Argus estimates.

Wood pellet burn in the UK has been lower so far this year, mostly as generation under the contracts for difference (CfD) state support mechanism became unprofitable — a trend that is expected to continue throughout the current summer season , provided that spot UK power prices continue to hold at current levels.

Danish biomass-fired power generation fell to an average of 655MW in the first quarter from 697MW a year earlier, according to Entsoe data, which is equivalent to 50,000t of wood pellets assuming 40pc efficiency. Utility Orsted said in its latest quarterly results that the share of biomass in its overall power and heat generation fell by 10 percentage points in the first quarter, mostly as its Studstrup 3 unit remained off line for all of winter 2022-23 following fire damage at its wood pellet silo in late September 2022, adding that unusually warm weather had also pared biomass consumption.

Dutch imports also dropped in line with weaker power generation. German utility RWE's 631MW Amer 9 wood-pellet fired unit in the Netherlands was off line for a planned outage between 18 February and 23 March 2023 and its co-fired Eemshaven unit B was off line for a week at the end of March, reducing pellet demand in the country.

All other European countries saw yearly losses in pellet imports in the first quarter, except Estonia and Turkey, which recorded a yearly increase of more than 30,000t each. Estonian imports from Vietnam rose to 37,000t in January-March, and Turkish receipts of Russian pellets rose to 32,000t, from zero a year earlier.

Turkish wood pellet exports increased significantly in 2022 compared with minimal shipments in previous years. Turkish domestic production and use of pellets is limited to a very few hundreds of thousands of tons, and companies are said to have burnt more imported Russian pellets domestically since western governments started imposing sanctions on the origin in July 2022, while exporting Turkish pellets to Europe.

Russian wood pellet exports to other parts of Europe effectively ceased from 11 July last year, removing around 2.4mn t/yr of supply from Europe, some of which was absorbed by South Korea.

In Italy, the world's largest residential pellet market, imports dropped to 232,000t from 410,000t a year earlier in the first quarter, with receipts from Austria — the country's major supplier of premium pellets — seeing the largest decrease.

An unusually mild winter combined with a sharp drop in power and gas prices, resulted in a lack of appetite for pellets in Italy throughout the winter 2022-23 season, with most companies entering summer 2023 with high stocks. There were 502 heating degree days (HDD) recorded in Milan, Italy, in January-March, down from 560 a year earlier and from the five-year average of 550 for the period.

By John Cooper

First-quarter European wood pellet imports '000t

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