Turkish biomass exports jump raising Russia origin concerns

Prior to the embargo, which was imposed in April as part of the EU’s fifth round of sanctions on Russia for invading Ukraine, Turkey shipped on average 2,200 tonnes/month of wood pellets – which can be used in power generation but also for domestic and regional heating – to EU destinations, according to Eurostat figures.

But this volume surged to an average of 10,000 tonnes/month from June, reaching 16,000 tonnes in September, the data showed, with October-November figures yet to emerge.

For comparison, Russia shipped an average of 153,000 tonnes/month to EU countries before the ban but had seen volumes drop to zero by September.

“Strange” upturn

“Turkey has become a very large exporter of wood pellets,” said a Scandinavian biomass trader, adding, however, it would have been “strange” for the country to have been able to ramp up production by such an amount, in such a short time.

As such, he said it was “conceivable” that Russian wood pellets were being reloaded at Turkish ports, recertified as Turkish origin and then shipped to “some less scrupulous” buyers in Europe.

Of the total exported in recent months from Turkey, the Eurostat data showed most was earmarked for Bulgaria and Italy, accounting for 9,000 tonnes and 3,600 tonnes, respectively, in September.

A Kyiv-based biomass trader – who works closely with Turkish exporters – said there might be some reloadings of Russian pellets, coupled with a likely upturn in domestic production.

“The skyrocketing price for biomass opens doors for very exotic options,” he said, adding wood pellets from Turkey were commanding prices of EUR 270-300/t.

“There are some wood reserves in Turkey, so they might use local wood materials,” he said.

However, no reliable production or export data was available in Turkey, according to Istanbul-based Montel-Foreks.

At the same time, repackaging Russian pellets for the European market would be a costly business, the Kyiv-based trader said.

High costs

He noted Italian buyers – for example – would have to pay as much as EUR 500/t if they were purchasing reloaded Russian material, pointing to high logistics and port-handling costs.

Front-month wood pellet prices were seen last at USD 380.33/t (EUR 362/t) on the EEX, down from October highs of nearly USD 467/t but still 76% higher on the year.

The first biomass trader said this was due largely to the drop in deliveries from Russia, which had previously met around 10-20% of Europe’s supply for power generators, predominantly in Denmark, the UK and the Netherlands.