1 Jun 2026
Pellet prices for households in Latvia have increased this heating season, reaching 240 euros per ton excluding value-added tax (VAT) — an increase of approximately 30 euros compared to the previous period. This rise adds pressure to household budgets, especially for those residents who purchase fuel during the heating season rather than stocking up in advance during the summer.
Retailers point out that the main reason for the price increase is a shortage of raw materials in the German and Austrian markets, linked to reduced pellet production in these countries. As a result, foreign buyers are increasingly turning to Latvian pellet producers. This situation heightens competition for locally produced goods and creates additional pressure on prices in the domestic market as well.
At the same time, activity in Latvia’s domestic market has significantly increased. One possible reason is the depletion of pellet stocks accumulated during the Covid-19 pandemic, prompting households to return to the market more actively, often trying to secure fuel for the winter earlier or in larger quantities.
Latvia is one of the few European Union countries where a reduced VAT rate is applied to pellets, which to some extent cushions the price increase. However, with rising demand and raw material shortages, this tax advantage cannot fully offset the market-driven pressure.
Industry representatives predict that the risk of price increases will persist in the coming years. One of the main influencing factors is the availability of raw materials. Due to climate change, the spread of bark beetles has intensified, leading to a shortage of spruce sawlogs, and some sawmills are not operating at full capacity. As a result, pellet producers face a shortage of wood chips, a critical raw material for pellet production.
Since pellet production largely relies on by-products of the wood processing industry, any decline in sawmill capacity directly affects the supply of pellets in the market.
Another significant factor is changes in international trade. Tariffs imposed by the US have altered the flow of sawn timber, creating market access issues. Meanwhile, in Western Europe, sawn timber producers are adapting more slowly, and industry processes overall are inertial. The sector emphasizes that these structural challenges will need to be addressed for at least a couple more years, meaning prolonged uncertainty in the pellet market as well.
The pellet market is not isolated — it is influenced by the overall situation in the energy market. For example, firewood prices, as is typical for this time of year, have risen. This price environment affects consumer choices and may increase demand for various types of wood fuel.
An additional risk factor is the impact of weather conditions on logging. The availability of energy wood is unlikely to improve, as another mild winter is currently being observed. For nearly a year and a half, logging has been taking place under autumn-like conditions. The most suitable periods for forestry equipment are times of drought or frost, while continuous work in wet and muddy conditions reduces productivity and increases maintenance and repair costs. These factors may, in the long term, also be reflected in raw material prices.
In the near future, market participants are paying close attention to stock levels and potential changes after the New Year. Currently, reduced logging volumes are not yet noticeable, as the industry is relying on previously accumulated reserves. However, if frost does not set in, a rise in wood chip prices could occur as early as January, which may signal broader price adjustments across the entire wood fuel market.
In the coming months, weather conditions, raw material availability, and demand dynamics both in Latvia and in export markets will be decisive.
