Michael Almberger, Sales Manager for Biofuels at Pfeifer, talks to us about peak prices, total market penetration and other hot benefits for pellet and briquette customers.
People still remember the record-breaking prices of 2022. Will the prices for pellets be similarly volatile in 2023?
The price peak is behind us, demand has plummeted since November 2022. The low consumption we are seeing right now is a result of the relatively warm weather and accounts for 20 - 30 % less consumption. However, the falling prices are due to calculations at the manufacturers.
The forecast sees growth on our core markets for 2023.
For even if the price of the product is now going down in the first quarter, developments in the raw materials sector are actually pointing in the other direction. As a result, it will become clear in the near future to what extent the shortage and the increase in round timber prices will affect the availability of pellets. In the end, market demand will again determine the price. Growth in our core markets is also forecast for 2023.
What role does panic buying play in this?
Panic buying exacerbated the trend enormously in the previous year because it emptied producers’ warehouses within a very short time. Combined with very high demand, this created a certain vacuum, which resulted in shortages and thus higher prices and longer delivery times. The massive demand for pellets, however, was also a result of the fact that some 12,000 pellet heating systems were sold in Austria in 2022. At the same time, supply from Russia, Belarus and Ukraine ran completely dry – these quantities were missing from the market and resulted in added pressure.
In the current situation, would you recommend stockpiling pellets or buying them when needed?
The most important thing is to bring a certain calm and stability back into the market and consolidate confidence in the product – that is, availability for the trade sector and an affordable price range for traders and producers should be achieved. If these factors are guaranteed, the question does not even come up. A storeroom should be filled when it runs empty. As the past has shown, panic buying and speculation are not the solution.
What kind of production capacities does Pfeifer have and does it intend to expand them?
Our current capacity is 620,000 tons of pellets and 20,000 tons of briquettes per year. Currently, there are no plans for capacity expansion. However, we are able to guarantee secure supply from our side. As Europe’s largest pellet producer, Pfeifer guarantees 100 % market coverage and supply readiness in its core markets of Germany, Italy, Austria, Switzerland, Czechia and France. This fact makes panic buying obsolete.
But that’s not the only benefit for Pfeifer customers ...
The benefits are massive. First and foremost is our quality – when it comes to pellets, Pfeifer is a household name. Moreover, Pfeifer stands for continuity, service and contract compliance. We have delivered all contracts already concluded down to the last ton, even if they did not correspond to the market price at the time. The result of our efforts is a large and particularly loyal customer base.