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The future of Europe's pellet industry

The current offer will soon be extended to meet growing demand

Pellets: is everyone really after them and are they getting harder to find? Maybe over the last few months, but there is some interesting news for the near future. Mrs. Annalisa Paniz, Electrical Appliances Unit manager at AIEL, the leading Italian association in the Wood Energy sector, tells us more.


Ms. Paniz, as a sector expert, can you tell us how and by how much pellet demand is growing in Italy and abroad?

Italy is the main European market for domestic pellet consumption, which reached 2.5 million tonnes in 2013 with stable growth rates of 15% over the last three years. Only a small portion of the demand is met by domestic production, which does not cover more than 20%. Therefore, Italy is also the main global importer of pellets for domestic use, which come from the most diverse regions of the world. Austria, Germany, Croatia and Slovenia are historically the main countries we import from. However, the considerable increase in consumption in these countries (except for Germany), as well as in other countries, has led to lower amounts being available for export.

As a result, in 2013, pellet supply logistics underwent a change with a rise in seaborne imports from North America to the detriment of imports by road. North America, and especially the United States, has an almost endless production capacity and big international groups are increasingly attracted by the Italian market. 


How are manufacturers responding to this growing demand?

Italian production is stable or slightly down and in 2013 it will not exceed 300,000 tonnes. Increases in coming years are very unlikely. The high cost of both the manufacturing process and raw materials, together with the trouble in finding these materials on the market, mean that domestic production cannot meet growing consumption.

Over time, the high demand for pellets has led all Italian manufacturers to become importers as well, mainly from neighbouring countries. For the reasons already mentioned, manufacturers can provide a considerable contribution to imports to ensure demand is met, though certainly with relative volumes in relation to the total amount.


Over the last few years there have been various "crises" associated with pellet supplies that have led to a certain state of alarm in public opinion. How come? Are they likely to happen again?  

All young markets with a poor structure are subject to sudden 'crises', which are often difficult to deal with. The pellet market is no exception.

In 2007 a crisis happened following a significant increase in sales of pellet burning appliances. This led to a sudden rise in demand and the offer was not able to structure itself over time to meet requests.

Over the years, the pellet market and operators working in it have been able to organize and strengthen themselves. These are elements that should help prevent sudden crises in coming years.


As about prices, is it true that the cost will go up?

The difficulty in finding pellets on the market as winter approaches led to considerably higher prices, causing concern among market operators. At the moment (December 2013), pellet prices are noticeably higher compared to the same period last year. However, this kind of fuel is still much cheaper compared to methane

In any case, the ever increasing number of international retailers that consider Italy a country full of business opportunities and who are setting up logistics for seaborne imports with products packaged in increasingly well-equipped ports means there will be a positive outcome to the critical situation experienced when pellets with a certified quality label, mostly from the US, will be launched on the market at competitive prices.


AIEL - Associazione Italiana Energie Agroforestali

Mrs. Annalisa Paniz is one of the main operators at AIEL, the most important Italian association of the Wood Energy supply chain. It has more than 300 members and is divided into interest groups, that is groups of companies operating in the same specific segment of the supply chain (professional biomass manufacturers, producers and retailers of pellets, biomass electrical appliances, boilers and mini cogeneration applications, biomass systems installers and maintenance technicians).

The association's underlying theme has always been quality, which is essential to strengthen credibility in the sector. This is why the companies which form part of the various groups must have reference certifications: professional manufacturers must follow a program to gain a quality certification to offer chips and firewood that comply with the standard. Pellet producers and retailers must have a certification based on the ENplus scheme and technology manufacturers (stoves and boilers) need to have one based on European reference standards.

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