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COVID-19 could widen ENplus pellet price span survey finds

A recent survey conducted by the wood pellet certification scheme ENplus on the impact of the coronavirus (COVID-19) pandemic on certified wood pellet value chain suggests that 75 percent of ENplus certified producers and traders that responded have been negatively affected by the pandemic, with two out of three companies already planning the introduction of new pellet prices for end-users.

The negative impact of COVID-19 pandemic on ENplus certified companies (graphic courtesy ENplus).

According to ENplus, the goal of the survey was to gather data on the current impact of COVID-19 pandemic on ENplus certified companies and to provide information on possible future fluctuations in the market of high-quality wood pellets. A total of 93 certified companies from 21 countries – primarily based in Europe – responded, ensuring a reasonable representation of the pandemic impact on the small and medium-sized wood pellet business.

Over 83 percent of those experiencing a negative impact observed an unusual reduction in end-user demand for the first half of 2020. More than 51 percent feel severely affected. Lockdowns imposed logistics constraints which affected more than 74 percent of those being negatively impacted by COVID-19.

However, 57 percent evaluate the effect of these constraints on their business as moderate. The majority of ENplus producers and traders experienced a negative impact and indicate they have not encountered issues regarding the availability of raw material (for producers) or the pellet supply (for traders).

Demand slump

More than half of the negatively affected producers and traders point out the reduction in end-user demand as the most significant consequence thus far. An assumption could be made that this will be the main reason for a decrease in production and trade that more than half of the participating companies expect in the coming months until the end of the year.

Alongside the negative trend, it should also be noted that the pandemic brought some opportunities for a limited amount of certified companies  – about 5 percent of respondents. Contrary to the majority, most of these companies report an unusual increase in end-user demand during the first half of 2020.

Market variations

In fact, these market variations could be one of the reasons for the expected changes in pellet prices for end-users. Almost 36 percent of the respondents plan a small price increase, while another 26 percent of companies intend to decrease the prices until the end of 2020.

In both cases, the new pellet prices will most probably introduce a difference of up to 20 percent.

Consumers of ENplus certified wood pellets should expect new prices during the second half of 2020, with over 64 percent of the survey respondents considering introducing changes (graphic courtesy ENplus).

The collected data indicates also that the chances for a price increase or decrease are expected in all parts of Europe so all end users on the continent might be affected by these changes almost equally.

The survey also found that local government aid is available according to 71 percent of respondents but less than half of them plan to apply for it. Government aid availability was reported by companies in Belgium, Bulgaria, Croatia, Czechia, France, Hungary, Italy, Latvia, the Netherlands, New Zealand, Poland, Spain, Tunisia, and the United Kingdom.

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