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Woody biomass prices continue to decline

Jan. 13, 2012, Seattle - Prices for woody biomass have decreased throughout the US for the past three years, according to the North American Wood Fibre Review.


January 13, 2012
By Wood Resources International LLC

Jan. 13, 2012, Seattle – Prices for woody biomass in the US, whether sawmill byproducts, forest
residues or urban wood waste, have been sliding for most of the past three years but were
still higher in the 4Q/11 in most regions than they were five years ago, according to the
North American Wood Fiber Review.

The price drop seen in 2010 and 1H/2011 was
mainly the result of lower prices for fossil fuels, particularly that of natural gas, and
reduced demand for energy. This declining price trend has reduced the interest by both
commercial and residential energy consumers in switching to more expensive green
energy.

The two major sources for woody biomass are bark from sawmills/plywood plants, and
forest residues left after logging operations. In the major biomass-consuming regions of
the US, prices for forest biomass have been $10-20/odmt higher than for mill biomass
during most of 2011. The region with the lowest biomass prices in the 4Q/11 was the
West, while Maine and New Hampshire continue to have some of the highest prices in
the country. In the US South, prices have fallen 15-20 percent since early 2010 and forest
biomass prices in the South Central states in particular have come down lately thanks to
favorable weather conditions.

The much-heralded Chinese log export boom has impacted woody biomass pricing in the
Pacific Northwest the past year. China does not allow the importation of logs with bark,
which has resulted in an abundance of bark at export ports along the US west coast,
where export logs have been debarked. This new source of biomass supply has created
headaches for biomass supply managers in the region as they have had to turn away
ample supplies. As a result, prices for forest biomass, mill biomass and urban wood have
all declined between 5-10 percent during the fall, as reported in the North American
Wood Fiber Review. Some biomass buyers have not only reduced prices, but also
implemented strict quotas of delivered volumes.

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As long as prices for natural gas and oil are relatively low, there will not be much
increase in demand for biomass and biomass prices will continue to stay relatively low
throughout the country.

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 covers sawlog, pulpwood,
and biomass markets in North America. The report includes prices and market
commentary for 15 regions on the continent and is read by a majority of the forest
companies in the US and Canada.

For more information, visit www.woodprices.com.


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