With everything that has been going on the world in these past few months, it finally looks like we are emerging out of lockdown and back into a world similar to how we know it. There have been many countless articles written about the subject of COVID-19 so here I would like to express what we are seeing today in our market, specifically wood pellets.
Here in the United Kingdom we experienced a mild winter, with less demand for heating than a typical winter season. This led to retailers holding more stock than usual and discounts starting earlier to encourage sales. Along with the arrival of spring and then lockdown it has led to less customer demand for heating, and the inaccessibility of stables has meant a reduction in bedding purchases and banning of holiday travel has heralded a large downturn in clients for catteries. These are all traditional buyers of wood pellets.
What this has meant, is that there is a fantastic window of opportunity for anyone in the position to be able to take stock for delivery in June, July & August to receive some of the best prices in the past 5 years and definitely the very best prices that have been around in the past 3 years to my knowledge.
What might happen after August as we move into Autumn?
Well, as our pellets all come from residue, either directly from the primary processing (timber) or from secondary activity (furniture, doors, floors) we are heavily reliant on those industries. However the downturn in economic activity has affected those markets. People are building less new houses, putting off purchasing new furniture, or replacing their wooden floors.
This means that we could see one of the largest swing effects as the market goes from over supply to a rapid decrease and shortage in wood pellets. The longer customers put off purchasing and locking in an already historically low price the more risk they run of being caught short when the raw material becomes in short supply.
What do we suggest?
We understand many customers are looking to reduce capital expenditure during these uncertain times, and not holding large stock coming into the Autumn. However looking at the typical supply and demand, and the shortage on the supply side is something we are able to forecast ahead and see there will be potential big shortages. We would recommend looking at historical requirements, and whether you are buying for personal use, a collective, or your business and assigning a percentage of that to lock-in these prices and delivery in June, July or August.
We do also offer a range of different pellets such as our PBF Wood Pellets, Pure Wood Pellets, Multi Purpose, MM Holz BIO Pellets, and quite a few others. We also offer different delivery options so please get in touch and contact our team so we can see what might be the best fit for you.