concern, for the most part pellets still enjoy a significant cost savings over fossil-based heating fuels in Europe and, with the notable exception of natural gas in the U.S., North America as well. For the most part, pellet heating demand is supplied by local producers, so it has less of an impact on global trade. While the U.S., Germany, France, Austria, Sweden and others have substantial pellet heating demand, the only market that has a significant impact on global trade is Italy, where pellets are primarily used for home heating. We estimate that Italy imported 2.3 million tonnes of pellets in 2018. The market is likely even larger as there is a black market for wood pellets in Italy to avoid a 22 per cent value-added tax (VAT) – estimated at 200,000 to 300,000 tonnes by the Wood Pellet Association of Canada. The U.S. has one of the largest pellet heating markets in the world. Annual demand in 2018 is estimated at 2.5 to 3.0 million tonnes. About 85 per cent of U.S. demand is met by small-and 25,000,000 Global Pellet Imports Percentages are year to year growth rates 26% Average increase 2013-2018 of 2,060,000 tonnes per year 13% 7% 7% 20,000,000 Metric Tonnes 15,000,000 19% 10,000,000 5,000,000 2013 2014 2015 2016 2017 2018P United Kingdom Denmark South Korea Italy Belgium Japan Other Source: Global trade data, December 2018, Analysis by FutureMetrics medium-sized domestic producers, roughly 10 per cent is imported from Canada and five per cent comes from industrial producers in the U.S. South. For the last several years, the U.S. pellet market has had a glut of inventory, but that has cleared and producers are now worried about shortages in the market over the 2018-2019 heating season, primarily due to fibre supply issues in the East (about 50 per cent of the U.S. market is in the Northeast). We expect to see moderate growth in the U.S. heating market over the next several years, but nothing like what is expected in industrial markets. YOUR CHOICE FOR ANY BIOMASS DRYING NEEDS Our Rotary Drying Systems are custom-built to produce a variety of fuels and products. We have been custom building equipment worldwide for over 30 years. BIOMASS • WOOD FIBER • CELLULOSE • AGRICULTURAL • WOOD CHIP • SAWDUST • WOOD BIO PRODUCT • WOOD POWDER PROUDLY GROWING IN GREENDALE, WI, USA CONSULTATIONS ARE FREE. Please contact our Main Office in Greendale, WI www.uzelacind.com 22 Canadian BIOMASS CBM_Uzelac_Winter19_CSA.indd 1 (414) 529-0240 or Our Kansas Office in Neodesha, KS (620) 325-2269 WINTER 2019 2019-02-07 10:19 AM
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