North American pellet export growth continues

April 23, 2014, Seattle, Wash. – With no slowdown in sight,
North American wood pellet exporting companies keep building new facilities to
manufacture pellets for the European market, according to the latest market
update from Wood Resources International.

Export volumes hit a new record high in the 4Q/13 and the
total shipments for 2013 were up almost 50% from the previous year and more
than double that in 2011. The total value of wood pellet exports reached over
650 million dollars last year.

A rapid expansion of pellet production capacity in the U.S.
South during 2012 and 2013 has resulted in a tripling of pellet production in
the region in just two years. The expansion, which is entirely driven by demand
for biomass in Europe, has increased pellet exports from 800,000 tons in 2011
to 2.9 million tons in 2013 according to data compiled by WRI and reported in
the North American Wood Fiber Review (Note. WRI data is partly based on an
industry survey since customs data on both sides of the Atlantic are not always
reliable).

Many of the recent investments in pellet capacity in the U.S.
South have occurred along the Atlantic coast, with Enviva and Fram Renewables
expanding production in the states of Georgia, North Carolina and Virginia.

The expansion in Canadian pellet export has been less
dramatic than that of the U.S., but 2013 volumes were still over 50% higher
than in 2011, with British Columbia shipping a majority of the volume. In
Canada, there have been two recent developments of interest, 1) the first
regular shipments of pellets to South Korea started in the second half of 2013
and, 2) exports from Eastern Canada from Quebec, Nova Scotia and New Brunswick
increased during this same time period.

Eastern Canada will see additional pellet export volumes
later in 2014 when Rentech begins operation at its two pellet facilities now
underway in Ontario. As reported in the NAWFR (www.woodprices.com), a Quebec
pellet export facility under construction at the Port of Quebec is the first
dedicated infrastructure for pellet exports along the St. Lawrence Seaway. Its
presence, when completed, reduces the heretofore, substantial entry barrier for
a number of smaller pellet companies which are interested in the international
market.

In the 4Q/13, export volumes from the Eastern provinces
accounted for 25 percent of Canada’s total pellet exports, a share that is
likely to increase in 2014 and 2015.