What’s happening with the wood pellet industry in the Baltics is worthy of your attention. The frigid waters of the Baltic Sea connect Scandinavia to northern and eastern Europe, and Russia’s western port complex. In aggregate, the region—just a few days sail from most of the markets of interest in the European Union—exported over 4 million tons of wood pellets in 2014 with additional production capacity well on its way.

This issue starts with “Baltic Boom,” Associate Editor Katie Fletcher’s review of pellet production in the Baltic countries of Latvia, Estonia and Lithuania. Roughly the size of two West Virginias and a couple of New Jerseys, these countries have established themselves as real players in the European pellet trade and have ambitious growth planned. Fletcher began her research with arguably the most knowledgeable person about the wood pellet sector in the world, fortuitously, for the purposes of her story, a Latvian, Arnold Dale. Dale made it clear while presenting at this year’s Wood Pellet Association of Canada general meeting that the producers in the Baltics were formidable competitors. If the 2.65 million tons of pellets Fletcher reports these countries produced in 2014 doesn’t impress you, the over 500,000 tons of capacity under construction that Dale rattles off will. The Baltics seem almost purpose-built for pellet production boasting “abundant forest land, low costs of production, port accessibility, low energy costs and low taxes.” Fletcher’s story makes it clear that the Baltic trade will grow at least as quickly as European demand, and perhaps even faster.

St. Petersburg sits at the end of the Gulf of Finland, the easternmost arm of the Baltic Sea. I learned while writing my feature, “Waking up the Bear,” that, for now at least, this port handles more pellet volume than any other port in Russia, and is likely to see increased traffic as Russia’s pellet industry continues to grow. If read together, the stark differences between Russia and the Baltic countries can be fully considered. Latvia, Lithuania and Estonia are the size of small U.S. states while Russia is almost as large as the U.S. and Canada combined. The enormity of Russia’s forest resource might initially indicate unlimited potential for the industry, but it is actually the Russian pellet industry’s biggest challenge and one that will have to be overcome if Russia hopes to match the pace of growth of its Baltic neighbors.

Tim Portz
Vice President of Content & Executive Editor
tportz@bbiinternational.com