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Global timber and wood products market update

July 31, 2013, Seattle - Wood pellet exports from North America were up more than 50 per cent in the 1Q/13 from 1Q/12 with the United Kingdom being the major export destination, reports the North American Wood Fiber Review.


July 31, 2013
By Canadian Biomass

Pellet exports from the two primary pellet-producing regions
on the North American continent – the U.S. South and British Columbia – showed no
signs of slowing in early 2013, with the rate of growth likely to accelerate in
the second half of the year.

In the U.S. South, pellet export volumes to Europe resumed
their double-digit growth after a brief pause in the 4Q/12. Export volumes, based
on information from industry sources as well as trade data in Europe and North
America, showed exports in excess of 1.7 million tons in 2012, as reported in
the North American Wood Fiber Review (www.woodprices.com).

Canadian exports also rose in 2012 to 1.5 million tons, but
this increase was less than that seen in the U.S. During the 1Q/13, total pellet
exports from North America reached a new record of over one million tons for
the quarter. This can be compared to the annual shipments of 750,000 tons just
four years ago.

The U.K. continues to strengthen its claim as the primary
destination for North American pellets with more than two-thirds of the export
volume from the U.S. and Canada going there in the 1Q/13.

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The story of Drax's plans for its large power plant
conversion from coal to biomass in Selby, England, continues to make news
across North America. Drax Biomass, a new sister company to Drax Power, that
will manage North American operations, announced the construction of two pellet
plants earlier this spring in the U.S. South which will be sending pellets to
fuel the U.K. facility.

Also, in Eastern Canada, pellet producer Rentech announced
an off-take agreement with Drax Biomass, which will result in new investment in
ports to increase pellet-loading capacity, and in rail transportation, along with
the construction and operation of two pellet facilities themselves.

The increase in pellet production in Western Canada has
pushed sawdust prices upward the past few years, with 2013 prices being about
15 per cent higher than they were in 2010, as reported in the NAWFR. In the U.S.
South, where smaller logs from thinnings and treetops are commonly used for
pellet manufacturing, there has not yet been any region-wide upward price
pressure as a result of the new wood-consuming sector in the region.


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