North American pellet shipments plateau

October 22, 2014, Seattle, Wash. – Total shipments of wood
pellets from North America to Europe plateaued in 2014 after almost four years
of continuous increases. During the first two quarters of 2014, exportation
from Canada and the U.S. were just over 1.3 million tons in each of the two
quarters. This was down from the all-time-high of almost 1.4 million tons in
the 4Q/13, according to the latest issue of the North American Wood Fiber
Review (NAWFR).

Pellet volumes shipped out of Canada to Europe have actually
fallen by almost 25% from the 4Q/13 to the 2Q/14, while volumes leaving the
ports in the U.S. South did go up ten percent during the same time period.
(Note. Due to irregularities with customs data, NAWFR collects trade data from
a number of sources including Canadian and U.S. customs export data, European
import data and from quarterly conversations with both pellet exporters and
port contacts.)

Practically all wood pellets produced in British Columbia
since the first major pellet plant was built over 15 years ago have been
consumed by energy companies in Europe. However, since late last year, there
has been a shift in direction for some of the pellets manufactured in the
province; rather than being sent on the 16,000 kilometer long journey to the
United Kingdom or the Netherlands, they are being shipped to markets in Asia, a
trip that is only about half as far.

South Korea and Japan together imported about 100,000 tons
of pellets from British Columbia in the 2Q/14, which accounted for 17 per cent
of the total exports from the province that quarter, reported the NAWFR
(www.woodprices.com). This can be compared to a quarterly average of only
30,000 tons during the period 2010-2012. This shift to markets in Asia is
likely to continue because demand for biomass is rising in this region. The
reduced shipments to Europe from Western Canada can be expected to benefit
other supplying regions to Europe, including the U.S. South, Eastern Canada and
Northwestern Russia.

There are multiple factors that are likely to increase
pellet shipments from the U.S. South to Europe in the second half of 2014. These factors
include continued interest from governments in Europe in shifting from fossil
fuels to renewable energy sources, the approaching winter, with its increased
demands for fuel to heat homes, and the soaring tensions between Ukraine and
Russia, which have implications for energy security for Europe.