Russian pellet producers turn to domestic heat demand and Asian buyers
Russia’s wood-pellet output is recovering from its post-2022 collapse as producers expand domestic sales and seek buyers in China, South Korea, Turkey and the EAEU. Logistics, municipal boiler conversions and long-term fuel contracts will determine whether the industry can rebuild volumes by 2030.
Output begins to recover from a deep contraction
Russia’s wood-pellet industry is rebuilding around domestic heating and Asian sales after sanctions disrupted its export-led model. According to Vedomosti, production rose from 0.97 million tonnes in 2015 to 2.8 million tonnes in 2022, while exports averaged 85% of output during 2015-2022. That expansion tied plant utilisation to European demand, foreign certification and maritime logistics. Pellets are produced mainly from sawdust, wood chips and other processing waste, linking the business to sawmill activity and the economics of heat supply in areas without pipeline gas.
The former trading structure weakened sharply after 2022. Vedomosti reports that output fell to 2.07 million tonnes in 2022 and 1.10 million tonnes in 2024, almost 61% below the 2021 peak. Production recovered to 1.31 million tonnes in 2025 as domestic availability expanded and exports to China increased. In January-June 2026, plants produced 639,000 tonnes, 12.2% more than a year earlier. The improvement indicates that the deepest phase of the downturn may have passed, but many producers still rely on spot export shipments and seasonal domestic contracts signed before the heating season rather than stable multi-year sales.
Domestic sales replace part of the export loss
The balance between foreign and domestic channels has changed substantially. Russia exported 2.42 million tonnes, or 86.5% of pellet production, in 2021. By 2024, exports had stabilised at 610,000 tonnes, equivalent to 55.5% of output, while an estimated 489,000 tonnes remained on the domestic market. Much of this fuel serves regions outside integrated energy systems. China and South Korea remain important to Siberian suppliers, while Turkey and members of the Eurasian Economic Union are emerging destinations. However, Vedomosti says Asian demand cannot quickly replace the former EU volumes because Russian suppliers compete with established Vietnamese and Indonesian exporters.
Domestic growth faces a similar constraint: production and consumption are often far apart. Pellet lines are concentrated near sawmills in northwestern Russia, Siberia and the Far East, while potential customers are isolated settlements dependent on costly fuel oil or coal. Freight, transshipment, dry storage and seasonal stock accumulation can absorb much of the fuel’s price advantage. Projects are therefore most competitive when feedstock, pellet production, storage and heat demand are located within the same regional supply system. In gasified regions, pellets seldom compete with pipeline gas; in remote municipalities, the relevant alternatives are fuel oil, diesel and transported coal.
Boiler investment will shape demand through 2030
Regional programmes are beginning to create larger, more predictable buyers. Nearly 8 billion rubles was allocated in regional budgets through special treasury loans to convert boiler plants to pellets in 12 regions. In the Komi Republic, a programme covers 126 boiler plants with annual biofuel demand of about 165,000 tonnes. A group of 25 new or modernised facilities is valued at roughly 1.8 billion rubles, requires about 35,000 tonnes of pellets and is expected to save as much as 200 million rubles in fuel costs each year. Arkhangelsk Region was also deploying 20 pellet-fired boiler plants in 2025.
Demand is broadening beyond municipal heating. Fuel-briquette production reached about 232,000 tonnes in 2025, an increase of more than 20%, while forestry companies’ own boilers, greenhouses, hotels and households in non-gasified districts also use wood fuel. Vedomosti’s base scenario puts pellet output at 1.5-1.7 million tonnes by 2030; an optimistic case reaches 1.9-2.1 million tonnes if regular Chinese shipments develop and more obsolete fuel-oil and coal boilers switch to biofuel. Domestic consumption could account for 50-55% of production by then. Achieving that range will require coordinated investment in boilers, storage, transport and servicing, backed by dependable fuel contracts rather than support for production capacity alone.
