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The Analysts of the pellet market show a considerable cautiousness in their forecasts for the year 2015

A price bulletin of wood pellets in Ukraine for January – February 2015, issued at Ukrainian Biofuel Portal pellets-wood.com indicates that the pellet market participants are in the position of anticipation, which led eventually to a limited amount of sales quotations. In the first place, this situation is due to the devaluation of national currency and to the aggravation of economic climate in the country.

Consequently, this situation affected the prices showing a multidirectional traffic depending on the conditions of delivery and of payment currency. Hence, February prices for pellets in hryvnias on FCA terms have fallen by 52% in comparison with January, and those on EXW conditions, in contrary increased by 8%.

The Analysts explain this behavior of salesmen by the devaluation of hryvnia and by the decrease of buying attitude of population and of legal entities. The last year was marked for the Ukrainian economy by a fall in index by 7%. In particular, during the fourth quarter of the past year the level of GDP decrease constituted 15, 2%. Unfavourable forecasts are prepared for the current year. IMF and the authorities forecast the index of inflation of 25% - 27% with its peak in the first quarter. If the most pessimistic forecasts are fulfilled, then the index of inflation will attain 30% and the economy will fall by another 5, 5%. Supposedly a fall can slow down only in the next year with a possible insignificant rise in indices in the second half-year. That’s why, some are ready to decrease prices in attempt to attract clients, while the others increase prices in attempt to compensate their expenses.

Nonetheless, some analysts of alternative fuel market regard this situation exclusively as beneficial for pellet producers. They draw these conclusions relying on the intentions of authorities to increase energy utilities tariffs, which can lead to massive defaults of payments, to a complete refusal to accept gas as a means of heating and to massive transition of households to solid-propellant boilers. It is worth reminding that from the first of April of the current year a threefold and even a fivefold increase of tariffs is announced.

The programs of implantation of the alternative types of fuel in public service and in industry inspire some hope. Therefore, officials and industrialists attempt to decrease their expenses on energy utilities.

Interpipe Company is an illustrative example here. It has been implanting energy saving technologies during two years, owing to this, in 2014 it succeeded to save 8 millions of dollars. In particular, Interpipe Niko Tube enterprise set up a pellet boiler room which supplies hot water to the household sector and to the administrative sectors №1 and №2. In near future another boiler room is supposed to be launched serving to supply the pipe rolling workshop.

In terms of the above-mentioned information, Sergey Kozlov, the leading analyst of Ukrainian Biofuel Portal pellets-wood.com considers that after a temporary stagnancy the pellet market can expect a steep rise in demand for the production. It will help native producers recover a former profitability, satisfy the current and future needs, and in the perspective, to penetrate into other product markets of the countries being actively engaged in the implantation of energy saving technologies such as China, Austria, Great Britain and Netherlands.

Author: Ivan Prokhorov

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