How Justified is the Panic Over Pellets? 0 7

In the third week of frost, it became difficult to buy not only pellets but also the increasingly popular briquettes made from compressed wood chips, writes Latvijas Avīze. The shortage of pellets in retail arose because traders, when signing supply contracts with manufacturers, did not assess the average consumption of pellets and relied on the experience of the previous warm winter.

The total production capacity of pellets in Latvia is about two million tons per year, while consumption is about 250,000 tons. Thus, the production capacity is nearly ten times greater than consumption. Therefore, it is logical that everything not consumed in the local market ultimately ends up being exported.

"Pellet factories plan production in advance. Contracts with traders are signed in spring or summer for one to two years. Currently, pellet production is operating at full capacity, but there is not enough for local consumption. No retailer expected such a winter. Traders did not sign contracts, so they are not guaranteed volumes. If they want to obtain all 250,000 tons of local consumption in one day, week, or month, tension arises," says the head of the "LATbio" association, Didzis Palejs.

The demand for fuel at retail points in mid-January increased three to four times. Consequently, it is not always possible to ensure sufficient supplies to all stores, explain representatives of the traders. To calm the frenzy, manufacturers resorted to methods that worked during previous periods of panic in the local market. For example, during the energy crisis that began after Russia's invasion of Ukraine, manufacturers started selling pellets directly at the factory gates and tried to convince buyers that pellets should be purchased for about a month to accommodate more people. The same is happening now.