Residents of private houses who use wood pellets for heating cannot fail to notice that the price of this fuel has doubled during the year. The jump in prices is due to the rise in the price of wood chips and even the shortage on the European market. In most Latvian cities, heating is provided directly by wood chips. Uncertainty about how much wood chips will cost in the autumn and whether they will be available at all has caused panic in Europe. The responsible Ministry of Economics in Latvia does not see any reason to worry and provide reserves, reports the program “Nekā Personīga”.
The company “Staļi” started working as a manufacturer of wooden windows and doors. The rest of the production is processed into chips and further into pellets. This adjacent business has now grown, the company buys wood chips from eight more suppliers and produces about 40 thousand tons of pellets per year.
The total consumption of pellets in Latvia is about 200 thousand. Theoretically, there is no concern for security, as the country as a whole produces ten times more – 2 million tons. But the European market was practically shaken by the war in Ukraine and the ensuing sanctions against Russia and Belarus. About 4 million tonnes of pellets were previously imported into Europe from these countries, which now need to be replaced. Another two million tonnes may be required to replace gas heating with pellet systems.Spring chip pellet producers usually have a quiet season when the heating season has just ended, but cooking for the next one has not yet begun. There has been no break this year. The pellets of the previous season have already been bought out, the new price is twice as high. But finding pellets well for double the price is hard.
SIA “Staļi” executive director ARTURIS BUKŠS:
At the moment we are feeling a great demand from Central Europe, from Italy, from Poland, from various other countries. Every day these are at least 100 requests that require – give us pellets.
The company exports about 80% of its production. Despite huge demand, pellet producers are not working at full capacity. Unable to get the chips needed for production.
SIA “Staļi” executive director ARTURIS BUKŠS:
There have been days when we have stopped production because simply the pulp chips were not enough that day.
There are various alternative places, such as ports. And it’s an easy way, and they can’t be blamed for taking the ship away. Says: dear friends, it costs me two euros more, very simply, sorry, we did not take you today.
Many producers in Latvia and abroad compete for wood chips: producers of pellets and particle boards, pulp mills, boiler houses. In Latvia, favorable prices for central heating were dominated by wood chips imported from Belarus, but it is no longer available. The Ministry of Economy, which is responsible for energy, does not see the threat of a deficit, although it does. Wood chips have become twice as expensive during the year, and the ministry predicts that it will remain at that level for the next heating season.
Deputy State Secretary for Energy, Ministry of Economic Affairs EDI SHAIKAN:
As for the wood chips from Belarus, we are not importing them this year, but we did not run out of wood chips in the winter, they were enough. It is not right to say that the Belarusian chip was a panacea for us and saved everything.
Pleft without a cheap Belarusian resource, and seeing an increase in prices in Europe, wood chip suppliers broke their contracts during the last heating season. Then switched again – already at higher prices.
JSC “Riga heat “ valdes the chairman NORMUNDS TALCIS:
Suppliers terminated contracts, paid fines for their termination. But we no longer benefited from that fine, we need chips. We started buying him by months, divided by weeks.
The heat supply company of the capital joined the Lithuanian wood chips exchange a few weeks ago and buys fuel there as well. On the scale of Riga, they are still small and the real situation will be clear after Midsummer. Then the procurement of wood chips announced by “Rīgas siltuma” will end.
JSC “Riga heat “ valdes the chairman NORMUNDS TALCIS:
We realized that we need to diversify this purchase of wood chips, to divide those risks into several directions. We began to actively look for where to buy something else. We have bought the bark and what is left for them in the sawmill that is now being delivered. Then we have started in the “Latvian State Forests” competition for the next year, we have won one part of the amount we need.
Half of all forest territory in Latvia is managed by the state company “Latvijas valsts meži”. It sells low-value wood in two ways. It reaches Latvian producers unprocessed. But also in a fragmented way abroad.
“Latvian State Forests” use felling residues and trees thinned from stands. Previously, they were purchased by the Stockholm heat supply company, but “Rīgas siltums” has auctioned them for the first time. Now they have to compete with each other for wood chips from the country’s forests.
AS “Latvia Country forests “ valdes member EVIN ZAKOVICS:
This is an additional resource that we could look for in the geopolitical situation that has arisen since 24 February. At the moment, as the demand for this resource grows, we can also justify it economically, going deeper into the forest, which might have been a minus sign in the past, but now it is a stable plus sign.
In the timber industry, there are calls for the state to build up wood chip stocks, as the market situation is volatile and prices may rise further. The head of the Federation of the Wood Industry believes that the only real way to do this would be to declare a state of emergency, for which he sees no basis yet. The most important thing for the Ministry of Economics is that there will be chips and pellets at all. Residents who are unable to afford expensive heating are more likely to be paid benefits.
Executive Director of the Latvian Wood Industry Federation CHRISTAPHER’S HEARING:
Unless we declare an extremely serious crisis and the country does not build up its own savings, as is the case with gas and fuel, for example, we cannot restrict and ban the export of a product to, for example, Lithuania or Sweden.
Imagine Riga and tell me where. We could use Spilve Airport, but it doesn’t make much sense. In the end, we will spend more than we theoretically save on these savings.
Deputy State Secretary for Energy, Ministry of Economic Affairs EDI SHAIKAN:
At the moment, in terms of the availability of neither wood chips nor pellets, there is no situation where we have to suddenly regulate something and limit something.
If there is a concern for the municipalities or if it is necessary to buy wood chips in certain municipalities, I see no reason why they should not do so if they see such concerns.
The pellet producer “Staļi” thinks that chip suppliers should be encouraged to keep a larger share of production in Latvia, for example, by granting tax rebates or similar incentives. If this does not affect the price of pellets, then at least their availability on the domestic market.
SIA “Staļi” executive director ARTURIS BUKŠS:
We are no longer able to meet the demand that Europe needs. It would be naive to think that in one day everyone will buy, everyone will have enough and everything will be solved.
When we plan for the July production, we see that I will not have enough pulp, we will simply be forced to stop production. We will be forced to look for a solution to do with employees who are paid official salaries.
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