SOURCE: 2013 REN 21
ÂŤ Outlook
Wood Pellet Global Trade, 2012
Domestic, Global Outlook Speakers at PFI conference forecast continued market growth. BY SUSANNE RETKA SCHILL
T
he outlook for growth in the fuel pellet market is still positive, although it has been tempered some from earlier overly optimistic projections, attendees learned from several speakers at the Pellet Fuels Institute annual conference held July 29-30 in Asheville, N.C. The U.S. domestic pellet market has tracked the natural gas market relatively closely, Seth Walker, an associate economist with RISI Inc., told attendees. When natural gas prices were trending higher a few years ago, interest in pellets grew, with pellet stove sales peaking at 140,000 per year in 2008. When the natural gas market nosedived the following year, pellet stove sales dropped by more than half, where the market has held. Given that correlation, natural gas price forecasts indicate a positive outlook for the pellet industry as well, Walker said. Natural gas prices appear to have bottomed out and 36 PELLET MILL MAGAZINE | Q3 2013
are forecast to steadily rise. He estimated the U.S. currently has about 845,000 wood pellet stoves that create demand for about 2.33 million tons of product annually. He also projected that 50,000 to 60,000 stoves would be added annually in the next few years. The global market for pellet fuel in 2012 is estimated at 22.4 million metric tons, said Gordon Murray, executive director of the Wood Pellet Association of Canada. Europe is almost self-sufficient in pellet production at about 12 million tons with North American production coming in at half that of Europe and Russia, the next largest. In Europe, the United Kingdom is the No. 1 importer bringing in 855,000 metric tons from Canada last year and another 475,000 metric tons from the U.S. While Canadian pellets dominate the U.K. market, the U.S. is the biggest supplier to the
Netherlands and Belgium. Denmark and Sweden receive the most pellets from Russia. He predicted that there will be a new surge for industrial pellets when several power conversions come online in 2015 including Drax and Eggborough in the U.K., EON Langerlo in Belgium and Delta in the Netherlands. While the EU power market has gotten much attention, Murray pointed out that the heating market comprises 40 percent of the EU pellet market, with no subsidy required. “Pellets are 30 percent cheaper than heating oil,� he said. Currently, 90 percent of Canadian exports are being shipped from western ports and going through the Panama Canal, but an effort is underway to organize the smaller pellet producers in eastern Canada to pool resources and product to develop export facilities in the East. Arnold Dale with Sweden-based Ekman & Co., said such cooperative efforts