Pellet market analysts are extremely cautious about their forecasts for 2015
According to the cost summary for wood pellets in Ukraine for the period of January and February 2015 published at Ukrainian biofuel portal pellets-wood.com, market members took their waiting position and as a result a number of selling offers was significantly limited. It was connected with devaluation of the national currency and worse situation in the country’s economy.
This situation reflected in prices indicating differently directed movement according to delivery conditions and payment currency. February prices for pellets in hryvnias on FCA terms fell by 52 per cent compared to January and rose by 8 per cent at EXW conditions.
First of all the analysts consider such suppliers’ behavior was connected with hryvnias devaluation and citizens and legal body purchasing power reduction. Last year Ukrainian economy finished with falling indexes by 7 per cent. Particularly during the fourth quarter of the last year the real GDP reduction level was 15,3 per cent. This year has unnerving forecasts as well. IMF and the government expect inflation level of 25-27 per cent with its peak in the first quarter. If the worst forecasts come true the inflation level will reach 30 per cent and economy level will fall by 5,5 per cent. Certain slowing down of this fall might be expected next year with possible grow in the second half of the year. That is why someone goes into price reduction in order to attract customers but the others cover their expenses by increasing them.
However a number of alternative fuel market analysts take this situation as an advantage for pellet manufacturers. They came to this conclusion after the government decided to increase prices for energy sources that would cause massive delinquency and refuse from gas as a heating source with households’ conversion to solid fuel boilers. For information, it was announced the increasing rates by 3-5 times starting from April, 1.
Extra hope give us programs in alternative fuels implementation into utility and industrial area. That is the way how officials and manufacturers reduce energy sources expenses.
We can take Interpipe company as an example. This company engaged into energy saving technologies implementation for more than two years and managed to save more than $8 ml in 2014. Besides a pellet boiler room was constructed at the Interpipe Niko Tube plant supplying hot water to maintenance and administrative buildings No1 and No2. It is expected to start up a new boiler room for supplying the pipe rolling plant No 7.
Therefore Sergei Kozlov, the leading analyst of Ukrainian Biofuel Portal pellets-wood.com considers that after a short cool down the pellet market should expect sharp growth of the demand for this product. It would help national manufacturers to renew their cost effectiveness, fulfill existing and future needs and then enter new market outlets in countries that implement energy saving technologies such as China, Austria, Great Britain and the Nethrlands.
