North American pellet exports increased during the third quarter

By North American Wood Fiber Review | February 11, 2016

North American overseas pellet exports increased for the second consecutive quarter in the third quarter of 2015, rising 15 percent from the previous quarter to reach a new record high of just over 1.6 million tons, according to the North American Wood Fiber Review. The U.S. South continues to be in expansion mode with additional capacity being added during the fall of 2015.

Newly operating pellet plants in the U.S. Gulf Coast region made their presence felt in the third quarter of 2015 with their first shipments to Europe. German Pellets in Louisiana, Drax Biomass’s two new plants in Louisiana and Mississippi, and Zilkha Biomass Energy in Alabama all continued their ramp-up of operations. Primarily due to these new facilities, exports from the Gulf ports rose by 54 percent from the previous quarter to reach over 550,000 tons in the third quarter of 2015.

The quarterly shipments of pellets from Canada remained practically unchanged during the first three quarters of 2015. While shipments to Europe fell in the third quarter of 2015, representing a 6 percent reduction from the previous quarter, a large rebound in shipments to Asia more than made up for the reduced European shipments. Canadian exports to Japan and South Korea climbed in the third quarter of 2015, almost doubling second quarter 2015 volumes. However, the third quarter 2015 volume still represented just one-third the volume shipped to Asian destinations in the record-high third quarter 2014, as reported in the NAWFR (www.woodprices.com).

The United Kingdom remains the primary destination for North American pellet exports, and in the early third quarter 2015 the government announced plans to reduce various subsidies for green energy from a variety of sources. Policy developments in both the U.K. and the Netherlands underscore the still unsettled details around biomass utilization in Europe despite the continent’s commitment to green energy.

The Drax biomass plants in the U.K. remain by far the largest user of North American pellets. Future industrial pellet demand in the U.K. was also bolstered in the third quarter 2015 with the announcement that a coal-burning power station in Northumberland will close at the end of 2015 only to be converted to a pellet-burning plant operating by the end of 2017, dependent on final government approvals.

(Note. Due to irregularities with Customs data, NAWFR collects trade data from a number of sources including Canadian and US customs export data, European import data and from quarterly conversations with both pellet exporters and port contacts.)

The North American Wood Fiber Review has tracked wood fiber markets in the US and Canada for over 20 years and it is the only publication that includes prices for sawlogs, pulpwood, wood chips and biomass in North America. The 32-page quarterly report includes wood market updates for 15 regions on the continent in addition to the latest export statistics for sawlogs, wood pellets and wood chips.