Wood Pellets Production and Trade in Russia, Belarus & Ukraine

Abstract

Summary & Conclusions

Production volumes and capacities
More than 650 000 tons per of pellets were produced in Russia in 2008. We expect that more
than 850 000 (and even up to 1 000 000 tons) tons of pellets could be produced per year by the
end of 2009.The production capacity of pellet plants was more than 1 290 000 tons per year in
2008. We expect that the capacity will be more than 1 700 000 (and even up to 2 000 000 tons)
tons per year in 2009. Belarusian pellet production is the smallest among 3 countries. They
produce about 60 000 tons of pellets per year. Ukrainians could produce about 200 000 tons of
pellets in 2009. The pellet plant capacities are increasing in all three countries.

Internal pellet market
Pellet domestic market is increasing in all 3 countries. We expect that it could be about 30% in
Russia by the end of 2009. It could be the same in Ukraine. Belarus can organize it and reach at
least 5-10% level.Domestic market for fuel pellets keeps growing in Russia as well as in Ukraine
and Belarus.

Main growth contributors are:
· private boiler-house owners – production enterprises, warehouses and logistics centres switching to pellets to decrease fuel costs and improve heat supply reliability
· municipal boiler houses
· private house owners

Boiler suppliers claim to have supplied over 1000 pellets boilers (below 200 kWth) in 2008 plus
several dozens professional pellets boilers (over 200 kWth) have been installed in different
regions of Russia by the end of 2008. It is important to know, that while in 2006-07 there were
no more than 10 companies offering pellets heating systems, by the beginning of 2009, the
number of pellet boiler suppliers is over 50 companies. And they are covering most regions of
Russia – at least the regions where pellet are being produced. Internal market in Russia is
growing. But it hardly gets any consequent support or even serious attention from the state – but
for rare exceptions on local level. As a result the market is developing voluntarily - without any
plan.

Export markets
The pellet export still dominates in all three countries. The prices are going up in 2009. Pellet
price is up to 120 Euro per ton on FOB St.Petersburg for bulk industrial pellets in April 2009.
Pellet producers were positively influenced by the world financial crises. The devaluation of
Ruble increased the profits of companies which export pellets. The European prices for pellets
went up again thanks to real winter and pellet producers receive double profits at the moment.
The prime costs in Rubles are the same as before devaluation of Ruble which was observed in
2009. The pellet production is developing in all 3 countries and we expect the organization of
serious pellet industry in Russia soon.

Full text

1
Wood Pellets Production and Trade
in Russia, Belarus & Ukraine
MARKET RESEARCH REPORT
Subcontracting to Pellets@las
(WP 6.1 Assessment of international pellet trade
developments in non-EU countries)
Written by Olga Rakitova, Anton Ovsyanko
Edited by Richard Sikkema & Martin Junginger
(Utrecht University)
May 2009
DISCLAIMER
The pellets@las project is supported by the European Commission under the EIE
programme (EIE/06/020/SI2.448557). The sole responsibility for the content of
this report lies with the authors. It does not necessarily reflect the opinion of the
European Communities. The European Commission is not responsible for any use
that may be made of the information contained therein.

2
Table of contents
Inco Term Abbreviations..............................................................................................................3
1. General overview in Russia, Ukraine and Belarus.................................................................4
1.1 Production capacities 2007....................................................................................................4
1.2 Internal markets 2007-2009...................................................................................................4
1.2.1 Russia .............................................................................................................................5
1.2.2. Ukraine ..........................................................................................................................6
1.2.3.Belarus............................................................................................................................6
1.3 Export markets 2007-2009 ....................................................................................................6
1.3.1.Russia .............................................................................................................................7
1.3.2.Ukraine ...........................................................................................................................8
1.3.3.Belarus............................................................................................................................8
1.3.4.Export by trucks .............................................................................................................8
1.4 Import markets 2007-2009 ....................................................................................................8
2. Russia..........................................................................................................................................9
2.1 Pellet production......................................................................................................................9
2.2 Pellet transport and deliveries..............................................................................................12
2.2.1 Typical export delivery schemes......................................................................................12
2.2.2 The most popular ways of transport packaging................................................................13
2.3 Price data................................................................................................................................13
2.3.1 Pellets for heating and pellets for power production....................................................14
2.3.2 Quality standards..........................................................................................................16
2.4 Final consumer markets........................................................................................................18
2.4.1 Domestic markets.............................................................................................................18
2.4.2 Export markets..................................................................................................................18
3. Ukraine.....................................................................................................................................19
3.1 Pellet production and deliveries ..........................................................................................19
3.2 Price data .............................................................................................................................22
3.3 Final consumers markets.....................................................................................................22
4. Belarus......................................................................................................................................23
4.1 Pellet production and deliveries ..........................................................................................23
4.2 Price data .............................................................................................................................23
4.3 Final consumer markets.......................................................................................................24
5. Conclusions ..............................................................................................................................25

3
Inco Term Abbreviations
Incoterms 2000 are internationally accepted commercial terms defining the respective roles of
the buyer and seller in the arrangement of transportation and other responsibilities and clarify
when the ownership of the merchandise takes place. They are used in conjunction with a sales
agreement or other method of transacting the sale.
1
CIF Cost, Insurance and Freight -- Title and risk pass to buyer when delivered on board the
ship by seller who pays transportation and insurance cost to destination port. Used for sea
or inland waterway transportation.
CPT Carriage Paid To -- Title, risk and insurance cost pass to buyer when delivered to carrier
by seller who pays transportation cost to destination. Used for any mode of
transportation.
DAF Delivered at Frontier -- Title, risk and responsibility for import clearance pass to buyer
when delivered to named border point by seller. Used for any mode of transportation.
DDU Delivered Duty Unpaid -- Title, risk and responsibility of import clearance pass to buyer
when seller delivers goods to named destination point. Used for any mode of
transportation. Buyer is obligated for import clearance.
FCA Free Carrier -- Title and risk pass to buyer including transportation and insurance cost
when the seller delivers goods cleared for export to the carrier. Seller is obligated to load
the goods on the Buyer's collecting vehicle; it is the Buyer's obligation to receive the
Seller's arriving vehicle unloaded.
FOB Free On Board -- Title and risk pass to buyer including payment of all transportation and
insurance cost once delivered on board the ship by the seller. Used for sea or inland
waterway transportation.
1
Source: http://www.freightplus.eu/incoterms-2000.html

4
1. General overview in Russia, Ukraine and Belarus
As a general remark, the currency rate has been changed significantly between 2008 and in 2009.
It was about 35 RUB for 1 Euro in 2007-2008 and it is 45 RUB for 1 EURO in April 2009. This
has caused wood pellet prices in expressed in Euros to decline compared to 2008.
1.1 Production capacities 2007
The 3 pellet markets in Russia, Ukraine and Belarus are similar on one hand and different on the
other hand. Russian pellet companies are concentrated mostly in the North-West of Russia and in
the Central part of it in regions where there are forests or woodworking industry is developed. In
general, the pellet business has started from the North-West of Russia where there are both
woodworking industry and harbor. Then it was spread to the Central Russia and Ural. Thus, the
Russian market is the most developed at the moment, but it is mostly wood pellets which are
produced here. Some husk and peat pellet producers exist in Russia but their number is limited.
Figure 1 The Russian, Ukraine and Belarus production of wood pellets – 2007
Country
Real production,
ton/year
(approximate) Nominal capacity, ton/year
(approximate)
Russia 550 000 1 200 000
Ukraine 60 000 140 000
Belarus 40 000 60 000
Belarus pellet producers are also prefer wood to other materials. A little bit different situation in
Ukraine. As agriculture is more developed here than wood industry, husk pellet producers have
app. the same share in pellet production as wood pellet producers.
1.2 Internal markets 2007-2009
If we come to the question of using pellets inside countries then we can see the following
picture. Belarus doesn’t use pellets inside country at all (it is based on interviews with pellet
producers from this country), but there are some plans to develop the domestic market here.
Russia and Ukraine use about 5-15% on the domestic markets in 2007. The domestic usage has
grown in 2008-2009. It was around 10-20% in 2008 and we can tell that around 15-30% of
produced pellets are used inside Russia at the beginning of 2009. Prices on domestic market are
different and they are depend on location of the plant, neighborhood of a big city, desire of big
supermarkets to work with pellets. For example, Ashan resale company (one of the biggest
supermarkets in Russia) buys pellets for 180-190 Euro/ton.. St.Petersburg supermarket net
KARUSEL has sold fuel pellets by 89 Rub for 5 kg small bags in 2008 (about 500 EURO per
ton). However this is the RETAIL PRICE for final consumer.
In 2009, the Moscow price in the retail warehouse in Moscow (Novotop) is 5400 Rub/ton (120-
125 EURO per ton) for 6 mm pellets in small bags. The price in supermarkets is higher.For
comparison, in Siberia the price for the same wood pellets (for example Surgutmebel which sells
only on domestic market) is about 2500-3500 Rub/ton (60-80 Euro/ton) ) with VAT ex works.
Cat toilets made of pellets are also expensive. Some small-scale producers sell pellets only for
cat toilets, because prices are the most attractive here. Pellets as biofuel are only coming to the
markets of Russia, Ukraine and Belarus. Number of private boilers as well as professional boiler
houses using pellets as fuel in Russia Ukraine and Belarus is still is limited to several thousand
household boilers (15-100 kWt) and several dozens of professional boilers (100-1000 kWt).

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1.2.1 Russia
Russia used around 5-15% of pellets on the domestic markets in 2007. The domestic usage has
grown in 2008-2009. It was around 10-20% in 2008 and we can tell that around 15-30% of
produced pellets are used inside Russia at the beginning of 2009.
Prices on domestic market differ and depend on the location of the plant, neighbourhood of a big
city, desire of big supermarkets to work with pellets. For example, in 2007-2008 Auchan retail
company (one of the biggest supermarkets in Russia of the French origin) has purchased pellets
for 180-190 Euro/ton. St.Petersburg supermarket net KARUSEL has sold fuel pellets by 89 Rub
for 5 kg bags in 2008 (about 500 EURO per ton). However this is the RETAIL PRICE for the
final consumer.
Domestic market for fuel pellets keeps growing in Russia as well as in Ukraine and Belarus.
Main growth contributors in 2008 were:
- private boiler-house owners – production enterprises, warehouses and logistics centers
switching to pellets to decrease fuel costs and improve heat supply reliability
- municipal boiler houses
- private house owners
The domestic market keeps growing in 2009 as well. New boilers are installing on biofuel.
Boiler suppliers claim to have supplied over 1000 pellets boilers (below 200kWh) in 2008 +
several dozens professional pellets boilers (over 200 kWh) have been installed in different
regions of Russia by autumn 2008. It is important to know, that while in 2006-07 there were no
more than 10 companies offering pellets heating systems, by this time (autumn 2008) the number
of pellet boiler suppliers is over 50 companies. And they are covering most regions of Russia –
at least the regions where pellet are being produced.
At the same time in general the Russian pellet boiler market is shared among several East
European biofuel boiler produces and Scandinavian producers at the moment (end 2008-
beginning of 2009). The big European boiler producers as Buderus, Viessman and others are not
presented in Russian pellet segment. They consider still Russia is not attractive for them.
Another disadvantage of these famous brands is high prices.
There are some Russian biofuel producers. The pellet boiler producers with actual produciotn
and models on the market are “SOYUZ” (Kovrov), Automatic_Les (Kovrov), Poli-NOM
(St.Petersburg) which have installed some pellet boilers in Russia. Other Russian producers as
“BaltKotlomash”, “EcoProm”, “Biysky Biofuel Plant” mainly declare their plans to produce
such boilers.
The internal market in Russia is growing. But it hardly gets any consequent support or even
serious attention from the state – but for rare exceptions on local level. As a result the market is
developing voluntarily - without any plan. Pellets market infrastructure is almost absent and has
to be established every time by interested pellets producers or boiler suppliers. Pellets can in
most case be only purchased from producers or from boiler suppliers. Retail chains do not sell
pellets, because of relatively low turnover on this product. However, some retailer companies do
it (IKEA in Nizhniy Novgorod, Sedmoy Continent in Moscow, some Karusel and Okey
supermarkets in some cities)
Pellets producers were actively promoting the use of pellets inside Russia in 2007-2008 because
export market was less profitable than it was in 2006. And internal prices are 30% higher than
export prices in general.

6
At the end of 2008 - beginning of 2009 the export pellet prices went up and pellet producers
became more active in export. The April price on FOB St.Petersburg in 2009 is 120 EURO per
ton or industrial bulk pellets. Moreover the currency rate has changed and pellet producers
receives more profit in Rubles. In 2009 the prime costs in Rubles are approximatelly the same as
in 2008 (there is small increase maybe because of some growth of electricity tariffs and some
other costs), but thanks to increase of Euro the profit out of export pellets is higher in Rubbles
than in 2007-2008.
1.2.2. Ukraine
Ukrainian domestic pellets market is also largely disorganized. But it is also growing very
quickly, because of the growing fossil fuel prices, which are in any case higher than in Russia.
At the same time the cost of transportation of pellet to Western Europe from Ukraine is lower
than from Russia, which makes export more profitable.
Specific features of the Ukrainian market compared to Russia are determined by another
structure of biomass resources. The share of sunflower husk pellets is relatively high. Much of
them are being sold to Ukrainian consumers, because this product is less known in Western
Europe.
We have little figures on domestic consumption of pellets in Ukraine. However, equipment
suppliers in Russia, Baltic States as well as in Central Europe are getting a lot of inquiries for
pellet boilers from Ukraine.
State support of the pellets use is not very consequent in Ukraine, but for at least one regulation:
VAT exemption for energy saving projects realized in Ukraine.
Pellets production in Ukraine develops slower than in Russia. This is mainly due to less
investment resources and less wood waste and other suitable biomass resources.
1.2.3.Belarus
Belarussian authorities claim to pursue a consequent policy aiming at the development of
renewable energy. This has also a political meaning in terms of avoiding too much dependency
on oil and gas import from Russia. However, this does not seem to contribute the actual pellets
industry development in the country. All operating pellets producers are owned by SME’s. Most
of the private. Most of them have been constructed without significant state support. And there is
still little internal demand for pellets. Most pellets produced in Belarus are being exported via the
Baltic States or via Poland.
All pellets factories in Belarus were established with very tough budget limitations. As a result
most or all of them are using domestic, second hand equipment and have very much down time.
We do not know any state of the art pellets production facilities in Belarus - even compared to
what has been built in Ukraine and Russia.
1.3 Export markets 2007-2009
Most pellet producers are oriented at exporting to Western Europe. There are no export duties on
this product so far. But the price crisis of 2007-2008 led to the decrease of production volume
growth pace in all countries as well as to temporary decrease in the level of interest to investment
projects related to pellets production. Some pellet producers told us in 2007-2008 that they
operate at or below the break even point, meaning that their production costs exceed actual
revenues. Other factories confirmed that they ere still profitable, but the business was not very

7
attractive as it used to be when they had 100% profitably. In 2008 the profitability level of
pellets production rarely exceeds 10-15%.
About 90% of produced pellets were exporting to Europe from Russia in 2007. in 2008-2009, the
situation has been changed thanks to currency change in Russian (because of the crises) and real
winter in Europe which led to positive results for Russian pellet producers. As other industries
have problems the biofuel producers have good times in 2009. The price went up in 2008-2009
and the Ruble went down. As a result the export oriented pellet production became double
profitable.
However, also the internal market has been developed in 2007-2008 and some pellet producers
are still oriented on the internal market. The internal consumption is growing, but export is
growing as well thanks for new pellet plants and modernization of existed plants which increase
there capacities.
But, there is a crisis in wood working and forestry industry which supplies the wood pellet
producers by resources and some plants could not increase the production because of this in
2009.
1.3.1.Russia
More than 50% of all pellet exports is going though different harbors of the Seaport
St.Petetsburg and Ust-Luga. You can see the logistics of pellets in St.Petersburg harbour on the
map below.
Figure 2 Harbour map of St.Petersburg
Порт Санкт-Петербург
Some pellets are exported though ports in Estonia, Lithuania and Latvia.
2
Klaipeda (Lithiania), Liepaya, Vetspils (Latvia), Paldiski (Estonia), Sillamae (Estonia)
Tallinn (Estonia)
2
See data on main traders in an earlier version of this report, available for download at www.pelletsatlas.info

8
1.3.2.Ukraine
Ukranian pellets are exported though ports Baltic ports (Klaipeda (Lithiania), Liepaya, Vetspils
(Latvia), Paldiski (Estonia), Sillamae (Estonia),Tallinn (Estonia))
Probably some pellets go via Black Sea ports, but not systematic as far as we know.
Pellets are also transported to Europe by trucks and railway from Ukraine.
1.3.3.Belarus
Pellets are exported though Baltic ports (Lithuania, Latvia, Estonia) as well as by trucks and
railway to Europe and Russia. Most active Baltic Ports re-exporting pellets from Belarus and
Central Russia are: Klaipeda, Liepaya, Ventspils, Paldiski, Sillamae,
1.3.4.Export by trucks
Some pellets producers in all three countries are selling their product to small European traders
and retailers, which offer better prices for small batches of consumer quality pellets. In such case
the product may be delivered to EU by trucks or in marine containers. Sometimes the producer
pays for transportation and sells his pellets on DDU basis. Other producers sell the product ex
works and the buyers send the transport for loading directly at the factories.
In all cases return trucks or containers have to be used to enjoy low freight rates. And it leads to
certain geographical limitations. To make this channel profitable, the producer has to be located
close to transport ways with much empty truck / container traffic towards the EU.
Truck / container delivery also allows to have the pellets packed into small bags in production
and simplify the logistics inside EU, which may also results in better profitability of the whole
channel. It is very hard to estimate the exact share of this channel in the whole export volume.
But it is substantial for all three countries. Especially – for Ukraine and Belarus – situated closer
to EU. Main directions of truck delivery are: Southern Germany, Austria, Switzerland, Italy,
Poland, Check Republic, Slovakia. Delivery in containers is mainly done to customers in
Northern Europe.
1.4 Import markets 2007-2009
There is no import in 2007-2009. The domestic market consumes 5-10% of the domestic
production, both in Russian and Ukraine.
More details are presented below, based upon primary data gathered through interviews with
pellet producers, consultancy and trade companies. In total, more than 90 companies were
interviewed. Most respondents are based in Russia. We have put all interviewed companies in
the list but if it needed other companies answers could be mentioned. Belarus market is not as
big as Russian and Ukrainian markets because of this the number of interviewed companies from
Belarus is smaller than from other countries.

9
2. Russia
More than 90 producers of pellets in Russia were interviewed about price, quality of pellets, their
opinion about market, consumers, ways of delivery and etc. On the base of this data the
following information is presented. Other knowledge which were received during the work in the
biofuel industry in Russia are used to present the following market research as well.
2.1 Pellet production
Bigger facilities are being opened these days. The most profitable model of pellets production is
processing own waste by large sawmills and woodworking factories. There are several producers
of the kind in Russia at the moment.
Figure 3. Overview of Russian pellet producers and their capacities (per April 2009)
Company name City, region
Nominal
capacity,
ton/month
Real production,
ton/month
2008 production
Algir Pellets Republic of Komi 1200 800
Argoinvest, Gruppa (argo pellets) Nihznyi Novgorod 1000 1000
Biogran-Alexandrov Vladimir area 500 500
Biogran (for 2009) Karelia 2500 1500
Biom Archangelsk area 4000 3000
Biomag Ecotechnology Karelia 1000 800
Biotop Novgorod region 2000 800
Biotek Leningrad region 1000 400
Biotopresurs Saint-Petersburg 1500 1200
Biotopresurs, OOO Sverdlov region 1000 700
Brilit Velikyi Novgorod 450 300
Bioles Tver region 500 150
DOK №5 Moscow 500 500
DOTS Salon Parketa Bryansk 1000 1000
Degtyarev CP (husk) Krasnodar 1000 800
Grinlat (husk) Rostov region 8000 10000
Granula Moscow region 2000 200
Green-power Leningrad region 2 000 2 000
Grog Adygeya 70 50
EuroMAB Moscow 1200 500
Europellet Leningrad region 600 400
Enisey DOK Krasnoyarsk region 4000 2500
EuroMAB Moscow area 1200 500
Ekoross, OOO (Kedr) Nizhney Novgorod 500 500
Ekoles Tver 2500 2000
Enbima (peat) Vladimir 7000 600
Ekopel Leningrad region 6000 1000
Ecotekh Leningrad region 1000 500
Ecoenergy (SPIKO) Pskov region 200 200
ЕМS Dnepr Smolensk 1200 1000
Ekoros (Kedr) Nizhney Novgorod 500 500
Furor Mariy El 150 90
Ingeneer center Leningrad region 500 700
Interteplo Kostroma region 1000 1000

10
Company name City, region
Nominal
capacity,
ton/month
Real production,
ton/month
Kruglov CP Nizhney Novgorod 1000 800
KosmoEnterprise Irkutsk 1000 1000
Lesprom Vologda region 1500 800
Lespromsever (SU 155) Belongs to Moscow
group 2500 1000
Lesnye Technologii Tver region 1000 1000
Lesimpeks Perm 1000 500
Mebel Buya Kostroma region 300 200
Murashinsky Biotoplyvnyi zavod Kirov region 600 450
Pavlovsk agroproduct (husk) Voronezh region 700 700
Permskaya Bitoplyvnaya companya Perm 600 200
Pellemax Group (Euro Techno) Vologda region 7000 1200
Pellet St.Petersburg 100 100
Plussky DOK Leningrad region 1000 600
PLK Pskov region 900 300-400
IP Feniks Perm region 500 200
Reley Kostroma region 1000 700
Romanovsky Kombinat
Kheleboproduktov (corn waste) Saratov 650 650
Rospolitechles St.Petersburg 4000
3
() 2500
Ruskhimprom Perm region 2000 600-1500
Sernurskyi opytno-proizvodstveniy
zavod (SOPZ) Maryi El Republik 500 400
Spektr Perm 300 250
Stolyrnya mastersyay Moscow 300 300
STOD Tver region 5000 2500
Trans-Trek Orienburg region 600 n/a
Terry Vologda 700 600
Tehnokom Vologda 200 200
Tikhomirov IP Ivanov region 100 100
Tumenprodresurs Tiumeni region 100 50
Topgran Kostroma region 1000 1000
TD Elmon Moscow-Karelia 500 400
VEEK + Salotti LO, Lodeinoe Pole 2000 1500
VEEK + Salotti LO, Lomonosov 1000 500
VEEK Pskov (Velikie Luki
4
+
Plussa) 1000 900
Toplivno-energeticheskaya
Kompaniya, OOO Rostov 1000 200
Voronezhmelservis (husk) 1500 1500
Vologdabioexport Vologda 3000 3000
Vologdalesprom Vologda 2000 400
VtorExpo St.Petersburg 500 400
UBK Smolensky region 250 150
ULPK Ulynovsk region 800 600
Uralskaya Biotoplyvnaya Company Ekaterinburg 600 30-50
Ulyanovskiy Lesopromyshlenniy
Komplex Ulyanovsk 800
400-600
Zakamskyi DOK Perm 200
100
3
standstill in 2009 due to technical problems
4
Pellets production has been moved away from Velikie Luki to Lodeinoe Pole

11
Company name City, region
Nominal
capacity,
ton/month
Real production,
ton/month
New companies which started
production in 2008
Baltisky
Lesopromyshlenyi
Holding (have not started) Leningrad region 2000 (haven’t
started, are sold)
Oyat’ Leningrad region 2000 (started) 500 (started)
Surgutmebel Khanti-Mansyisk 1000 (started) 1000 (started)
Novotop Smolensk 200 (started) 200 (started)
Ural-Pellets Chelyabensk 400 n/a
Setles Impilachti 2000 n/a
Lesozavod 25 Archangelsk 3500 3500
Toplivnye granuli Solikamsk 600 400
Biocalorian group Leningrad region 1500 1200
Green Energy Pestovo 2000 400
Altbiot Krasnodar 10000 500
Sialon Tatarstan 500 500
Companies which plan to start
production in 2009
Swedwood Tikhvin 4000
Biogran Karelia (increase in
2009) 2000-2500
Surgutmebel Khanti-Mansyisk
(increase in 2009) 2000
Altbiot (second plant) Vologda 10000
Progres-Neva Lizing Podporohzye 4000
Hzarkovsky DOK Tver 4000
Ural Biofuel Company Ural 200
Hzelenodolsky Fanernyi Combinat Tatarstan 4000
Setnovo (Stora Enso) Novrogod region 4000
The production capacity of pellet plants was about 1.2 millions tonnes of pellets per year in
2008. We expect that the capacity will grow between 1.7 and 2.0 million tonnes per year in 2009.
- 2008: more than 50 000 tons of pellets were produced per month and totally more than
650 000 tons per year were produced. Some plants were built but have not started operating
(Baltisky Lesopromyshlenyi Holding) – they have operated for several months and have
closed due to internal problems. Rospolitechles are not operated due to internal problems
(this plant is one of the pioneers on the pellet market)
- 2009: several big plants will start operating as well as working plants are going to increase
production volums. We expect that to the end of 2009 more than 850 000 tons of pellets
could be produced per year.

12
2.2 Pellet transport and deliveries
This section is split into delivery schemes (2.2.1) and way of packaging (2.2.2)
2.2.1 Typical export delivery schemes
Export transportation in big bags is normally more expensive than in bulk. This might lead to
lower price paid for pellets in big bags. However this dependency cannot be proven by statistics.
Pellets in small consumer bags are normally sold at a higher price
Figure 4. Examples of Russian pellet deliveries
Situation Solution
1. Small production in European part
of Russia. High quality pellets Big bags or palleted small bags by trucks directly
to retailers in WE (Germany, Austria, Italy etc.)
2. Small production in European part
of Russia. Industrial pellets. No
railroad in the neighborhood
Big bags by trucks to a seaport (St.Petersburg,
Klaipeda, Liepaya, Paldiski, Ventspils etc.)
Reloading in bulk or in big bags. Sea transport to
seaports in WE (mainly Northern Europe)
3. Small production in European part
of Russia. Industrial pellets.
Railroad in the neighborhood
Big bags by railroad. Sometimes also bulk rail cars
to a seaport (St.Petersburg, Klaipeda, Liepaya,
Paldiski, Ventspils etc.).
Reloading in bulk or in big bags. Sea transport to
seaports in WE (mainly Northern Europe)
4. Medium sized or bigger producers in
European part of Russia. No railroad
in the neighborhood
Big bags to a seaport by trucks (within 300-500
km. range). Or big bags by trucks to a railroad
station and to seaport by railway.
5. Medium sized or bigger producers in
European part of Russia. Railroad in
the neighborhood
Big bags by railroad to a seaport.
6. Medium sized or bigger producers
close to seaport Bulk containers (hard or soft) to seaport.

13
2.2.2 The most popular ways of transport packaging
Typically big bags are used by Russian pellet producers rather as transport packaging than end
packaging. It is rarely that pellets are exported in big bags. It is even more rarely, that pellets are
shipped from the production in bulk. In most cases big bags with pellets are being torn by
reloading of the product in the port and shipped abroad in bulk. Therefore it is hard to judge on
the price difference depending on either pellets are packaged in big bags or sold bulk.
Figure 5 Some examples of pellet packaging in Russia
Market segment Strengths
&opportunities Weaknesses
& threats
1. Big bags 500-1500 kg The easiest way to handle
pellets by non-specialized
facilities and means of
transport.
Used big bags can be
obtained relatively cheap in
all regions of Russia
Cost of big bags
Much time and high cost of
loading/unloading operations
2. Small bags consumer
packaging (12-25 kg) More value added – more
profit
Easier logistics in WE – can
be delivered directly to retail
shops
High packaging cost
High transaction cost – more
requirements to be met by
producers.
3. Bulk by grain cars Cheapest way of delivery to
port and bigger consumers
with bulk reloading facilities
Practically no seaports in
Russia can accept bulk rail
cars with pellets on regular
basis and store pellets in bulk
4. Bulk containers (20-40') Good compromise between
big bags and bulk cars High cost of returning
containers. Only feasible for
producers located within 100
km. distance from seaport.
High cost of containers
5. Bulk containers soft (9 t) Efficient delivery of bulk
goods for long distances
Low cost of returning
containers
Easy and cheap
loading/unloading operations
High cost of the containers.
Only rental.
Requires special arrangement
at the production
2.3 Price data
The only seaport with regular flow of fuel pellets in Russia is St.Petersburg. There are three
terminals where pellets are reloaded in St.Petersburg area:
- Seaport St.Petersburg (so-called 'old port')
- St.Petersburg Fish Port
- Ust-Luga Coal terminal
Some other terminals are planned to start reloading pellets, but no actual volumes nowadays.
Price level at all these terminals is more or less the same. Any deviations reflect particular terms
of business.

14
Figure 6. The dynamics of bulk industrial pellet prices FOB and CPT Seaport St.
Petersburg (in € per ton)
2003 2004 2005 2006 2007 2008 September 2009
March
FOB
St.Petersburg 85-90 90-95 95-105 110-125 90-100 95-105 105-120
CPT
St.Petersburg 70-80 75-80 75-90 80-105 75-85 85-95
95-115
The price for industrial bulk pellets in St.Petersburg harbor was about 90 € / ton excluding
VAT on FOB SPb in April 2008. It went up till 95-105 € / ton excluding VAT on FOB SPb in
September 2008.
In March 2009 prices went up (despite spring) for 5-10 Euros or even more. The maximum price
which was announced in March 2009 was 120 Euro per ton on FOB St.Petersburg. There are
some offers for 125 Euro per ton in April 2009.
The main foreign traders which work with Russian pellet producers are Norwegian Syr.
Pedersen AS and Sweden Lantmannen Agroenergi. The new trader from Denmark has come to
the market in summer 2008.
They buy at this price from big- and medium-sized producers which produce 1000-2500 tons per
month. (the max volume for Russians). The biggest producer in Russia is DOK Enisey.
Norwegean and Sweden traders work with Rospolitechles, Vologdabioexport, Green-Power,
DOK Enysey and some other big-scale producers. A Danish trader started to work with
Rospolitechles and some other companies. Swedish and Norwegians pay for trucks which come
to the harbor at the moment of delivery. Stock costs in harbor are covered by them. It is the most
suitable way of working for Russians. None of Russian factories are capable of producing 3000
tons (one shipload) per month to charter their own ship to Europe.
The Russian trader RBA is working with small producers. They buy for 200-300 kg of pellets
from each producer which deliver it to them to the plant near the harbour in St.Petersburg. The
maximum price was 70-80 Euro/ton including VAT (18%) in 2008. They buy in big-bags (500-
1500 kg) industrial pellets. They sell 5000 tons of pellets monthly.
2.3.1 Pellets for heating and pellets for power production
Seasonal price fluctuations practically cannot be identified for two reasons:
 insignificant internal market share means that most pellets are being sold to intermediaries -
traders, who buy based upon long term contracts with fixed prices, finance the producers and
keep pellets on stock during the low season.
 medium-term price trend has much influence upon the export price than seasonal. E.g. in
May 2006 one could expect stable price or price decrease due to the beginning of the low
season.
However we observed price increase instead. In April pellets were selling at 83 CPT
St.Petersburg and in June the price grew to 87-90 euro at the same basis. In particular cases of
small producers sending their pellets directly to small wholesalers and retailers in Europe,
seasonal fluctuations can be observed, but these cannot be used as basis for serious analysis,
because of small scope.
The price rate is very wide and it depends on a region. Some companies are operating on
domestic market only at the moment. For example, Surgutmebel, Novotop, some Perm
companies and other.

15
Figure 7 Market prices for 3 pellet segments (March 2008, September 2008 & March 2009)
Non industrial pellets for heating
In small bags (< 25 kg)
Unit: € / ton including VAT.
March 2008
150 Euro/ton in Europe.
7000 Rub/ton (190 Euro/ton) ExWorks (resale –
supermarkets as Ashan)
September 2008
160-165 Euro/ton in Europe. (prices went up apr on
10%)
17000 Rub\ton in the supermarket KARUSEL for 5
kg small bags (One bag costs 89 RUB)
March 2009:
(the current rate Euro/Rubble has changed
dramatically). It was 1 Euro=35 Rub in Autumn
2008 and it is 1 Euro = 45 Rub in Spring 2009.
Thus, the prices in supermarkets are not changed in
Rubles but the Euro equivalent has decreased.
Non industrial bulk for heating
Unit: € / ton including VAT. March 2008
3500 Rub/ton (95 Euro/ton)ExWorks (domestic
market to private cottages)
3000 Rub/ton (80 Euro/tonn) for export,
September 2008
4 RUB/kg (Novgorod region, for example). Thus,
4000 Rub/ton (110 Euro/ton) Ex Works (domestic
market to private cottages
March 2009:
4600-5500 Rub/ton (105-122 Euro/ton) Ex Works
in Central Russia
Perm: 70-100 Euro/ton in Siberia (on a plant
without delivery)
Industrial bulk for power production,
Delivered volume of 5.000 tons at international
harbor, preferably in CIF prices (import) but
alternatively in FOB prices (export). Unit: € / ton
excluding VAT.
March 2008
70-80 Euro in St.Petersburg. Source: RBA and
some pellet producers. They buy from small-scale
producers. (delivered volume to the trader is 200-
300 kg)
90-95 Euro/ton on FOB SPb which pay Swedish
and Norwegian traders which buy from big-scale
producers. (delivered volume is 1000-2000-3000
kg per month – maximum for Russia)
September 2008
It went up till 95-105 € / ton excluding VAT on
FOB SPb in September 2008. Danish trader have
came to the market
March 2009:
105-120 on FOB St.Petersburg or Baltic harbors.

16
2.3.2 Quality standards
The Russian and Ukranian markets are very specific and different from European pellet markets.
Companies prefer to export pellets than to sell locally because the domestic pellet infrastructure
is not developed. There is small number of private consumers and the number of houses with
pellet boilers is very limited.
Figure 8 Overview of Russian pellet production, quality schemes and consumer markets
Company name Answer about quality Answer about price Consumers
Company A
(St.Petersburg) Bulk and big-bags
High quality industrial pellets our of birch chips from the
plywood factory where this plant is situated.
Diameter of pellets: 8 mm
Humidity - less than 7 %.
Calorific value: 18 GJ/tons
Ashes - 0,7 %.
Flying substances - 85 %.
Volume for delivery is 3000 tons in month.
Delivery by ship party (by the gross in holds of the ship).
The Industrial equipment - "Andritz Sprout" (Denmark)
Plant are located near the harbor, the pellet production is
situated on the base of a big plywood company which
constantly supplies us by raw material.
It is 90-95 Euro/ton on FOB SPb in
2008. It was 177 FOB SPb in 2006
March 2009: the plant is not
operating due to internal problems.
Sweden and Great Britain. 5% is
private cottages inside Russia
Company B
(Krasnoyarsk) Big-bags 800 kg. High quality softwood pellets out of
sawdust from their own sawmill.
Diameter of pellets: 8 mm. Ash -0,3%
Equipment: Andritz Sprout
90 Euro/ton FCA Krasnoyaksk,
125 Euro/tonn FCA SPb. Domestic
market is 2800 Rub/ton (75
Euro/ton)
The same consumers as Company
A. Work with the same traders in
SPb. They told that Western
consumers want to buy not in SPb
harbours but in Baltic states
harbors, but the railway rate to
Baltic states in twice higher than to
domestic harbour of SPb.
They negotiate with Korenian and
Japanise consumers.
They told that the pellet domestic
market is developing at the
moment, but coal is cheaper than
pellets now.
Company C
(Moscow) Big-bags as well as small bags for 5-7 kg.
Diameter of pellets: 6-9 mm
High quality pellets out of sawdust from their own
sawmill
Equipment: domestic
3000 Rub/ton- ExWorks (export)
3500 Rub/ton ExWorks (domestic
market to private cottages)
7000 Rub/ton ExWorks (resale –
supermarket Ashan). Prices went
down on 15% compare to 2006.
Export to Europe, domestic market
(supermarkets and private
consumers – cottages)
Company D
(Tver region) Diameter of pellets: 6 mm
DIN plus, white pellets out of round wood
Equipment: Amandus Kahl
Haven’t answer about price They sell throught their holding
company. They deliver pellets with
lumber by the same trucks, coaches
and ships. Thus, the costs of
delivery is low for them.
Company E
(Tver region) Diameter of pellets: 8 mm
Calorific value: 17,84 GJ/tons
Ashes – 0,7 %.
Equipment: Amandus Kahl
They told that price is a secret 100% to Sweden, Great Britain,
Belgium, Denmark
Company F
(Leningrad region) Diameter of pellets: 6-8 mm.
Pellets out of birch and softwood sawdust, chips
Ashes – 0,6%
Humidity – 8%
Calorific value: - 4700 Kcal
Equipment: Sprout Matador
It is 90-95 Euro/ton on FOB SPb in
2008. The same consumers as
Rospolitechles’s. Work with the
same traders in SPb.
Company G
(Archangelsk region) DIN-Plus pellets out of softwood sawdust and chips
In 2008 the price is 150-160
Euro/ton CIF in big-bags
It was 160-180 Euro/ton in 2007 in
Austria in big-bags. Price is 20%
higher if pellets are packed in small
bags.
The main constant consumer is
Austria. They deliver buy trucks
and railway through Latvia to
Austia.
They are not happy with prices and
infrastructure in SPb harbor.

17
Company name Answer about quality Answer about price Consumers
Company H Diameter of pellets: 8 mm out of softwood sawdust and
chips
Calorific value: 17 GJ/tons
Ashes – 1 %.
Equipment: Andritz Sprout
It is 90-95 Euro/ton on FOB SPb in
2008. The same consumers as
Rospolitechles’s. Work with the
same traders in SPb. They collect
the ship load with Rospolitechles,
Gren-power and sell it to one
customer (The Norwegian or
Swedish traders which sell to
Great Britain, Sweden and some
other countries)
The production and delivery costs
to SPb harbor are about 110
Euro/ton.
Company I – the
Russian trader in SPb. Industrial pellets in big-bags.
The price which they buy is 70-80
Euro/ton in SPb harbour.
They buy from small-scale
producers. Each producer sells
about 200-300 kg. RBA collect
5000 tons per month and deliver 2
ships to Europe.
The competitive advantage is that
they work with smll-scale
producers and buy small batches.
Company J
(Leningrad region) Industrial pellets in big-bags (500 kg) as well as premium
quality.
Calorific value – 17-19 GJ/tons
Diameter of pellets: 6- 8 mm
Equipment in Lomonosov is Proletarsky zavod machinery
(Russia)
Equipment in Lodeynoy pole is CPM
100 Euro/ton for industrial pellets
in bulk on FOB SPb in 2008. It is
went down on 20% since 2006.
100 Euro/ton for premium quality
pellets on the plant.
The domestic market offers the
same prices as export market
Esport to Europe (Great Britain,
Denmark, germany, Italy) – 90%.
Domestic market – 10%
Company K
(Pskov region) DINplus quality out of their wood sawdust and chips with
ashes – 0,5%
Industial pellets with ashes 1,5% out of outsider wood
waste
70 Euro/ton from the plant, 150
Euro/tonn on consumer location for
DINplus
The export and domestic prices are
the same
They deliver big-bags (1ton) by
trucks, they deliver big-bags (700
kg) or in small bags (16-20 kg) on
pallets by railway.
70% is delivered to SPb to other
pellet producers which export
pellets in big batches.
30% is domestic market in Moscow
region for private cottages.
Company L
(Komi Republik) The ash content is high, but the volume was not indicated
out of softwood waste.
Diameter is 6-7 mm.
60-70 Euro/ton in SPb. They deliver pellet to SPb by trucks
and railway in big-bags.
They tried to work with private
consumers in Germany but they
were not successful in that. They
buy to big consumers now.
Company M
(Vologda) 17MJ, DIN 51731, 8 mm out of chips and sawdust.
Equipment: Pelleta-Tec, Sprout-Matador
100-98 Euro/tonn on exwork They sell to traders in SPb – 90%.
10% is for private boilers on
domestic market.
Update March 2009
Company N
(Smolensk) OGM presses, 200 t/month 4600-5400 Rub\ton on a plant in
Central Russia All produced volumes are sold on
domestic market
Company O
(Khanti-Mansyisk) OGM, 1000 t\month, plan to buy CMP or Munch in 2009
to increase production volumes 2950 Rub/ton on a plant in Siberia All produced volumes are sold on
domestic market
Company P
(Krasnodar) They have 2 presses with capacity of 5 tons per hour
each,. They have started at the end of 2008 and produce
about 500 tons of pellets per month, but they are planning
to reach the maximum capacity of 10tons per hour soon.
They have Slovak and Check equipment.
They sell to Europe All produced volumes are sold
abroadm but they plan to push the
switch boiler projects into pellets in
their region.
“Albiot” is constructing another big
plant in Vologda with the same big
capacity.
Company Q
(Pestovo) The capacity is 2000 tons per hour, but they produce only
400 tons of pellets per month.
They take wood waste from 50 woodworking companies
in Pestovo as well as from Pestovo-Nova (UPM-
Kummene saw-mill in Pestovo).
Sell to Finland only by trucks. The
distance to the customer is 800 km The price is about 105 Euro per
ton.

18
2.4 Final consumer markets
The following pellet flows (cases) exist in Russia:
 Domestic pellets for domestic heating
 Exported pellets via shipping of Russian harbors
 Exported pellets via transporting by trucks to Western Europe
2.4.1 Domestic markets
About 5-10% of all produced pellets are used inside Russia. Almost all producers sell as least 3-
5% on domestic market. Some small-scale producers can sell only on domestic market for
householders mainly and for several central heating plants (there are only few such plants in
Russia so far). We expect that more than 15-25% of pellets will be used on domestic market in
2009.
Figure 9 Russian internal pellet markets and prices – 2008 until 2009
Market segments Characteristic
1. Households
(small bags) March 2008
Prices may range from 3500 to 5000 rubles incl. delivery
Delivery in big bags or small 15-25 kg bags.
March 2009:
3500-7000 Rub/ton including delivery
2. Offices, warehouses, production
facilities, high class dwelling
communities
(big bags)
March 2008
Pellets price including delivery for such customers is
normally ranging between 3000 – 4000 rubles including
delivery.
Delivery in most cases is executed by trucks in big bags
March 2009:
Range between 3000-5500 Rubles
3. Municipal heating systems
(big bags; bulk) March 2008
Pellets prices in these cases are a bit 'political'. In Vladimir
Oblast they supply pellets below 2500 rubles per ton,
because producers consider such project very important for
further development of the internal market. Delivery in
most cases is executed by trucks in big bags.
March 2009:
2500-3500 Rub/ton
4. Bigger heating and energy facilities
(-)
5. Autonomous CHP facilities (-)
March 2008
There are no such facilities so far
2.4.2 Export markets
The most pellets are delivered to Europe through St.Petersburg harbor (at least 60-70% of
produced pellets). About 15% of produced pellets are delivered through the Baltic harbors in
period 2008 to 2009. Another 15% of produced pellets are delivered by trucks to Europe in
period 2008-2009.

19
3. Ukraine
If Russian pellet producers use wood waste for pellet production mostly, Ukrainian pellet
producers use both wood and husk waste for pellet production.
3.1 Pellet production and deliveries
Similar to Russia, the Ukranian markets is very specific and different form European pellet
markets. Companies prefer to export pellets than to sell inside because the domestic pellet
infrastracture is not developed. There is small number of pricate consumers and the number of
boiler houses is very limited.
Totally we can say that production capacity of pellets plants in Ukraine is about 140 000
ton/year, the real production is 60 00 ton/year for 2008. We expect that about 200 000 - 250 000
ton/year will be produced in 2009 and production capacity will be more than 350 000 – 400 000
ton/year in 2009
Ukrainian companies export pellets as well as Russians mostly. The domestic market is about
15% for Ukraine and it is growing thanks to gas increase prices and the domestic market could
be about 30% in 2009. New biofuel boilers are installed in Ukraine rapidly and under support of
government and European Bank of Reconstruction which gives a credit for Ivano-Frankovsk
(Ukraine) municipal boiler houses in 11,7 mln Euro in 2009. In the framework of this project,
pellet boilers will be installed as well.

20
Figure 10 Overview of Ukraine pelletproducers
Name Region Source Pellet characteristics
Capacity,
(in tonnes
/month)
Real
product
ion (in
tonnes/
Month) Consumers
/share Domestic market Price/delivery Packaging
Company I Luganska
ya area sawdust 8 mm 0,8% is Ash content, Calorific
value is 4146 KCal 1250 600 Sweden, Italy,
Poland there is no domestic
market
90 FOB in Baltic harbors,
transfer by trucks through
Poland to Baltic harbors,
then deliver to Sweden by
fairy. big-bags
Company II Volynsky
region
sofwood
sawdust and
peat
8 mm -
wood
pellets, 14
mm - peat
- Ashes 2,5%
- humidity 8,6% -heat 4200
kCal for wood pellets; ashes
in peat pellets 62%, 70% of
pellets are from peat 800 500 40%: Estonia,
Polans. Denmark
domestic market is 60%.
Consumers: shools,
hospitals in Volynsky
region
Price went up for 25% since
2006, export price is 85
Euro on the mill , domestic
market: 490 griven/ton
Export: big-bags for 800
kg and small bags for 15
kg. Bulk for domestic
market
Company III Chernigov sawdust, round
wood 8mm
4200KCal/ash content out of
sawdust- 1,5%, ash out of
wood - less 1% 800 200 Denmark, Italy 90-
95% pellets for cat's toilet 5-
10% 15kg bags on FCA 80 Euro/
100$ inside Ukraine big-bags and small bags
for 15 kg
Company IV Cherkassy oak sawdust 6mm DIN 3000 1000 100%: Germany
and Denmark don't sell for domestik
market 105 Euro on the location of
consumer by trucks in big-bags
Company V Zaporozh
ye husk 7mm ash 2,3%, 4464 kCal,
Kharkovsky certificate 300 300
sell for private
consumers for small
boiler houses in
Zaporozhye 130-190 $ on the location of
consumer big-bags by trucks
Company VI husk 14mm 400 400
Company VII Luganska
ya area husk 500 250 private consumers
Company VIII Poltava husk 8 mm 3,9%ash, 5120 kCal 1000 1000 Poland, Hungary,
Romania they sell more for
domestic market now FCA 50-70 Euro in Central
Ukraine bulk pellets by railway, in
big-bags by trucks
Company IX Poltava husk 8mm 3,6% ash, 4300 kCal 1500 400
Italy through
export companies
(traders) domestic market is not
very interesting fo them bulk pellets by railway, in
big-bags by trucks

21
Name Region Source Pellet characteristics
Capacity,
(in tonnes
/month)
Real
product
ion (in
tonnes/
Month) Consumers
/share Domestic market Price/delivery Packaging
Company X Poltava wood waste 8mm Industrial 150 0 Sell only to traders
inside country haven't told prices big-bags by trucks
Company XI Zaporozh
ye husk 8mm Industrial European Union
they sell a little for
domestic market to
private boilers and small
companies domestic prices are the same
as export prices railway in special wagons
(hoper)
Company XII Odessa sofwood
sawdust pellets for power stations 1700 Western Europe there is no domestic
market 80-100 Euro FCA railway in special wagons
(hoper)
Company XIII Marochno peat 6mm Western Europe
(Germany)
110-124 Euro FCA, prices
haven\t changed since last
year by trucks in big-bags
Company XIV Vinniza Wood pellets 2008 built 1500 1500 Domestic
Company XV Kosovo Wood pellets 3000
Plan to
start in
2009 Domestic

22
3.2 Price data
Because Ukraine is situated closer to the European Union as Russia pellets are delivered by
trucks mostly. However, railway to Baltic countries as well for St.Petersburg harbor is used.
Some companies deliver pellets to consumers to Europe directly by trucks, but some big-scale
producers uses railway and ships to deliver pellets. The prices for pellets and briquettes went up
on 15-20% in 2009 in general.
Figure 11. Ukraine Prices - 2007
Non industrial small bags (< 25 kg)
Unit: € / ton including VAT. 15kg bags on FCA 80 Euro/ton 100$/ton inside Ukraine (wood)
Non industrial bulk. Unit: € / ton including
VAT. 490 griven
5
/ton (wood) or 105 Euro/ton on the location of consumer
(wood in big-bags by trucks) inside Ukraine
130-190 $/ton on the location of consumer (husk in big-bags by
trucks) in Europe
110-124 Euro/ton FCA (peat in big-bags)
Industrial bulk, delivered volume of 5.000
tons at international harbor, preferably in
CIF prices (import) but alternatively in
FOB prices (export). Unit: € / ton
excluding VAT.
80-90 Euro/ton FOB in Baltic harbors, transfer by trucks through
Poland to Baltic harbors, then deliver to Sweden by fairy (wood)
FCA 50-70 Euro/ton in Central Ukraine (husk)
Industrial bulk from Ukraine: 80-100 Euro/ton FCA (wood)
3.3 Final consumers markets
Almost are Ukrainian pellets are exported though Baltic ports (Klaipeda (Lithiania), Liepaya,
Vetspils (Latvia), Paldiski (Estonia), Sillamae (Estonia),Tallinn (Estonia). Probably some pellets
go via Black Sea ports, but not systematic as far as we know. Pellets are also transported to
Europe by trucks and railway from Ukraine. A minor part of produced pellets stay within
Ukraine for domestic use.
5
1 €=6,7 griven

23
4. Belarus
Belarusian authorities claim to pursue a consequent policy aiming at the development of
renewable energy. This has also a political meaning in terms of avoiding too much dependency
on oil and gas import from Russia. However, this does not seem to contribute the actual pellets
industry development in the country. All operating pellets producers are owned by SME’s. Most
of the private plants have been constructed without significant state support. And there is still
little internal demand for pellets. Most pellets produced in Belarus are being exported via the
Baltic States or via Poland.
4.1 Pellet production and deliveries
All pellets factories in Belarus were established with very tough budget limitations. As a result
most or all of them are using domestic, second hand equipment and have very much down time.
We do not know any state of the art pellets production facilities in Belarus - even compared to
what has been built in Ukraine and Russia.
4.2 Price data
Thus, there is no domestic market in Belarus. 100% produced pellets are exported to Europe
through Baltic states mostly. The price for industrial pellets is 80-90 Euro/ton in DAF. Non-
industrial pellets are sold by 100-115 Euro/ton on the border in big-bags.
Pellet production capacity is 5000 tons/month, the real production is 3500 tons/month. Thus the
annual capacity was about 60 000 tons and real production was about 40 000 tons/year in 2008.
We expect that the pellet plants capacity will be about 90 000 tons of pellets per year in 2009.
The real production will be mote than 60 000 tons of pellets per year in 2009.

24
4.3 Final consumer markets
Belarus companies told that there is no domestic market at the moment. All of the questioned companies told that they export pellets to Europe and
mostly through Baltic states. They use railway more than Ukraine. The number of pellet mills in Belarus is small. Belarus companies produce pellets
out of wood mostly. If we come to the question of prices then Belarus companies told that prices went down by about 20-30 Euro/ton during 2007 to
2008. In 2009 prices went up again on the same 20-30 Euro. The more detailed information is presented in the table below.
Figure 12. Overview of Belarus pellet market actors and capacities - 2007
Name Region Source Pellet characteristics
Capacity,
ton/month
Real
producti
on
ton/mont
h Consumers/share Price/delivery Packaging
Company 1 Minsk sawdust, peat,legnin 10-12mm 17-19MJ 80 Poland, Germany,
Denmark, Italy- 100% 70Euro/tonn big-bags and small bags for 30 kg
Company 2 Gomel Sawdust 8mm 17MJ 800 800 Baltic states 100% 90 Euro/ton bulk in special wagons (hoper)
Company 3 Pinsk
chips out of plywood
production (birch,
alder) 6mm
DIN-51
industrial
pellets 1100 1000 100% Scandinavia 85 Euro/ton by bulk in
harbor (border) big-bags
Compnay 4 Bodruysk wood waste,
sawdust,chips
industrial
pelletsDIN-
51731 ashes 1,5% 800 500 100%: for trader in Baltic
states DAF: 85-87 Euro/ton,
bulk and wagons Bulk
Company 5 Vitebsk
Sawdust,chips 80%
softwood 20%
hardwood 8mm 4787kCal/kg 700 400 baltic states 100% 80 Euro/ ton DAF bulk in special wagons (hoper)
Company 6 Minsk chips, sawdust 8mm * 1600 800 Latvia, Lithuania,
Sweden, Holland- 100% havn't told /DAF bulk in special wagons (hoper)
Company 7 Minsk sawdust 6mm
near Din+, but
ash is a little
bigger on
0,01% Poland, Germany,
Denmark, Holland- 100% 100-115 Euro/ton on
the border big-bags
Company 8 Minsk Softwood sawdust 6mm and
8mm * Europe 100% * big-bags and special wagons (hoper)

25
5. Conclusions
Production volumes and capacities
More than 650 000 tons per of pellets were produced in Russian in 2008. We expect that more
than 850 000 (and even up to 1 000 000 tons) tons of pellets could be produced per year by the
end of 2009.The production capacity of pellet plants was more than 1 290 000 tons per year in
2008. We expect that the capacity will be more than 1 700 000 (and even up to 2 000 000 tons)
tons per year in 2009. Belarusian pellet production is the smallest among 3 countries. They
produce about 60 000 tons of pellets per year. Ukrainians could produce about 200 000 tons of
pellets in 2009. The pellet plant capacities are increasing in all three countries.
Internal pellet market
Pellet domestic market is increasing in all 3 countries. We expect that it could be about 30% in
Russia by the end of 2009. It could be the same in Ukraine. Belarus can organize it and reach at
least 5-10% level.Domestic market for fuel pellets keeps growing in Russia as well as in Ukraine
and Belarus.
Main growth contributors are:
• private boiler-house owners – production enterprises, warehouses and logistics centres
switching to pellets to decrease fuel costs and improve heat supply reliability
• municipal boiler houses
• private house owners
Boiler suppliers claim to have supplied over 1000 pellets boilers (below 200 kWth) in 2008 +
several dozens professional pellets boilers (over 200 kWth) have been installed in different
regions of Russia by the end of 2008. It is important to know, that while in 2006-07 there were
no more than 10 companies offering pellets heating systems, by the beginning of 2009, the
number of pellet boiler suppliers is over 50 companies. And they are covering most regions of
Russia – at least the regions where pellet are being produced. Internal market in Russia is
growing. But it hardly gets any consequent support or even serious attention from the state – but
for rare exceptions on local level. As a result the market is developing voluntarily - without any
plan.
Export markets
The pellet export still dominates in all three countries. The prices are going up in 2009. Pellet
price is up to 120 Euro per ton on FOB St.Petersburg for bulk industrial pellets in April 2009.
Pellet producers were positively influenced by the world financial crises. The devaluation of
Ruble increased the profits of companies which export pellets. The European prices for pellets
went up again thanks to real winter and pellet producers receive double profits at the moment.
The prime costs in Rubles are the same as before devaluation of Ruble which was observed in
2009. The pellet production is developing in all 3 countries and we expect the organization of
serious pellet industry in Russia soon
.