yesterday at 10:58
,Ukraine
After two years of continuous decline, the European wood pellet market is returning to growth. According to forecasts, in 2025 consumption in EU countries will reach 22.62 million tons, and already in 2026 it may increase to 23.45 million tons. For Ukrainian producers this opens new opportunities — provided they can respond to the challenges the market presents.
The drop in demand in 2023–2024 was the first in almost ten years of stable industry growth. Its causes coincided in time: an extremely mild winter, large fuel stocks accumulated after the energy crisis, lower electricity prices, and prolonged downtime at certain power plants. All these factors together significantly weakened interest from both industrial consumers and households.
The current recovery is two-sided: on the one hand, pellets are returning to industrial generation; on the other — their use for residential heating is growing. The largest consumers of wood pellets in the EU traditionally remain France, Germany, and Italy. It is the residential segment in these countries, as well as in Austria, Poland, Spain, and the Czech Republic, that forms the main part of demand growth.
EU domestic production cannot cover rising demand. According to the USDA forecast, in 2026 EU countries will produce about 20.5 million tons of wood pellets. The gap between production and consumption may exceed 2.9 million tons, forcing imports to rise to 4.68 million tons compared with 4.48 million tons in 2024.
A structural problem of the sector remains the shortage of raw materials. Sawdust, wood chips and other wood-processing residues do not meet producers’ needs, prompting them to increasingly seek alternatives — in particular agricultural residues. This trend is changing the traditional production model and placing new technological demands on market participants.
In 2024, EU countries imported 4.48 million tons of wood pellets worth about $1 billion. The largest supplier remains the United States with 1.9 million tons. Significant volumes also arrive from Canada, Brazil, Vietnam, Malaysia, and Thailand.
In 2024 Ukraine exported 408 thousand tons of wood pellets to the EU — down from 466 thousand tons the previous year. Despite the decline in volumes, it maintains a noticeable presence on the market. The recovery of European demand could theoretically stimulate increased production; however, competition will intensify as suppliers from North America and Asia actively expand deliveries.
An additional supportive factor for domestic producers is the Ukrainian government’s extension of restrictions on exports of unprocessed timber through 2026. These measures are intended to promote the development of the processing industry inside the country and preserve the raw-material base for domestic use.
Alongside the market recovery, the European Union is tightening regulatory requirements. The EUDR regulation obliges suppliers to confirm the origin of timber, provide geolocation data, and ensure full traceability of supply chains. For producers accustomed to operating without strict documentation, this becomes a serious challenge.
At the same time, for those Ukrainian companies that already hold the relevant certificates, verified origin of raw materials, and comply with EU environmental standards, the new rules may become a competitive advantage. The market is increasingly filtering out non-transparent players — and this opens space for those ready to operate under the new rules.
