Wood Pellet Update February 2018

Swainson and Cowin will have a delivery of bagged Wood Pellets arriving in dribs and drabs throughout February.  Initially we will be limiting the quantity that can be ordered per customer. We advise calling 01768 862455 and getting on our customer list, if you have not already done so, to add your details to our waiting list.  Why?

If you are shopping for bagged wood pellets right now you’ve probably noticed that most retailers are short of stock, or have dramatically increased their prices.  There is a European wide shortage of wood fibre (the raw materials pellets are made from), coupled with Verdo Renewables suspending all sales channels due to flooding at their Grangemouth site, this has restricted supply and massively increased the cost of pellets.

The short-term availability will remain patchy throughout the next few months, normalising to some extent early in the late Spring, but prices will remain uncertain until at least April.

Situation in the European Market

The European pellet market over the last couple of years has been in a position of oversupply.

With large quantities of the wood fibre used to manufacture pellets combined with a number of mild winters contributed to a buyer’s market where pellets were readily available and prices at historic lows.

Many European biomass fuelled power stations have come on line.  Which has created significant demand for the same raw material.  Additionally, Europe has had a warm and wet Autumn which has led to timber operations in many European forests being halted, as they rely on frozen ground providing access into the forests for their heavy machinery, if not their operations are significantly hampered due to access and their kit getting stuck.

There is a higher demand from both the traditional wood pellet market and biomass power industry and significantly lower supply of raw material. Raw Material costs has increased by as much as 90%, in others the raw material just isn’t available, regardless of what one is willing to pay.  Due to this shortage, many of the pellet producers are running at reduced capacities.  Quite a lot have ceased production until the raw materials are available again.  Finished pellet prices are now around 20% - 30% higher now than they were last year.  

Impact in the UK Market

The UK imports more than we export of wood pellets, hence any price changes in Europe are quickly reflected. UK producers who have been forced to sell at a loss in recent years to compete with imports can now charge a ‘sensible’ price to their retailers.

Swainson and Cowin usually prides itself on holding sufficient Verdo bagged stock to deal with any increased demand. Unfortunately, our stock holding was not able to keep up with the demand, combined with a delay in inbound stock. We are still experiencing much stronger sales of pellets than anticipated for this time of year.  As a result, all our pellets are currently being sold with a future dispatch date.  We never sell anything that we don’t have, so whilst there might be a delay in dispatch compared to our normal delivery service, you can be confident that if we have sold you pellets, these will be delivered as soon as possible.

Impact for Swainson and Cowin

We are expecting the supply of pellets to be patchy throughout February. We will be taking orders and dispatching orders throughout all of February as best we can to keep our loyal existing customers satisfied as possible.

In terms of pricing, we have seen a huge price increase and there is very little we can do about it.

Retail prices are currently up around 20% on a year ago. Wholesale prices have increased 20-30% and raw material prices have increased by up to 90%.  The market as a whole has done well at finding additional efficiencies and absorbing costs in order to limit the price increase being passed on to consumers.

Please bear with us during this difficult time.