Industry News Markets
Pellet exports to Europe rise dramatically

Pellet exports from the two primary pellet-producing regions on the North American continent, the U.S South and British Columbia, continued to increase in the third quarter of 2012 and reached a new record of 860,000 tonnes.

The growth is expected to continue with numerous plans for adding capacity, particularly in the U.S. South.

Pellet exports from the US South have skyrocketed the past two years with a quadrupling to 485,000 tonnes from the 3Q/10 to 3Q/12 to the 485,000 tonnes. Canadian exports have also gone up the past few years, but at a slower pace.

Beyond the trade statistics tracking the rise of pellet export volumes, another spate of export pellet plant announcements emphasized the quickly growing trade relations that are being established between European power utilities and U.S. pellet producers. The most striking announcement came in mid-December when Drax, a United Kingdom power company, stated its intention to build two 450,000 tons pellet plants, one in the state of Louisiana and one in Mississippi. Most other exportoriented pellet plants, while invested in by European utilities, are separate U.S.-based entities, with supply agreements and MOU’s defining the business relationship.

The three major European pellet import countries remain the U.K., the Netherlands, and Belgium, while Italy, Denmark and Sweden are notably involved in pellet imports from North America, but on a much smaller scale. Denmark’s Dong Energy utility, however, announced its intentions to switch to woody biomass at three of its coal plants, an action likely to add demand from the US Southeast.

Announced U.S. South pellet export plants increased sharply in the 2nd half of 2012. Export pellet facilities, which are under construction, conversion or redesigned will add an additional 1.7 million tonnes of capacity during 2013. In addition to these plants that are already under construction, five additional plants have been announced, and if they are actually built on the disclosed sites, they would bring another 2.3 million tonnes of capacity into play by the end of 2014.

Global pulpwood and timber market reporting is included in the 52-page quarterly publication Wood Resource Quarterly (WRQ). The report, established in 1988 and with subscribers in over 25 countries, tracks sawlog, pulpwood, lumber and pellet prices, trade and market developments in most key regions around the world. Visit: www.woodprices.com.