Pellet Competition As pellet markets expand and pellet producers crop up, what steps are needed to remain competitive? BIOMASS CANADIAN Volume 4 No.5 Editor -Heather Hager (519) 429-3966 ext 261 [email protected] Group Publisher/Editorial Director -Scott Jamieson (519) 429-3966 ext 244 [email protected] Contributors -Gordon Murray, Colleen Cross, Catherine Cobden C anadian pellet manufacturers have been the main source of pellets to Europe almost since the beginning of co-firing, but that might change. Our pro-ducers could soon be pushed out by bigger, newer plants in the south-eastern United States, which are closer to the market and can grow trees quickly on intensively managed plan-tations. If John Keppler has his way, that’s exactly what would happen. Keppler is CEO of En-viva, a southeastern U.S. pellet producer. Speaking at the recent North American Biomass Pellet Export Con-ference in New Orleans, Louisiana (covered on page 30), he indicated that the U.S. south is poised to become the supplier of pellets to Europe and Scandinavia. He suggested that western producers should return to supplying pulp and/or pulp chips to Asian markets and should send their pellets to new markets developing there. “We’ve seen a bunch of that trade going through the [Panama] Canal. That shouldn’t hap-pen,” he stated. The Maritimes he viewed as potential competitors with the U.S. south to supply Europe. Enviva is planning to supply Europe 1 million tonnes/year, and Florida-based Green Circle Bio Energy 500,000 tonnes/ year, their respective CEOs stated at the conference. Plus, there’s additional ex-port pellet production capacity in the U.S. southwest, and more planned. Then there’s Suzano in Brazil, which is planning to produce 3 million tonnes/year of pellets starting in 2014. Predicted increases in European demand for pellets of up to triple the current con-sumption certainly provides room for production growth. Canada is still the top supplier of pellets to Europe, with about double the U.S. exports, but the United States is catching up. Ca-nadian producers need to keep a close eye on these developments and take steps to remain competi-tive. Two major factors are transport and fibre costs. Northeastern producers should be in an excellent position to supply Europe, with a shorter shipping distance than from more southerly regions, but they are hobbled by poor port infrastructure. Serious in-vestment is needed in eastern deepwater port storage and handling terminals de-signed specifically for efficient pellet trans-fer. The expected commoditization of pel-lets, with an exchange to begin in late 2011, plus the move to introduce standardized pellet properties and specifications (through ISO/CEN certification) will present the op-portunity for aggregating pellets, similar to grain handling. This would allow multiple small producers to combine standardized product, maximizing economies of scale for shipping. Such producers might consider joint investments in port infrastructure. To minimize production costs, pellet producers must continue to source the lowest cost fibre from sawmill and logging residues. Supporting market development for those sectors will ensure a continuous and stable supply of low-cost residue. • Heather Hager, Editor [email protected] Market Production Manager Josée Crevier Ph: (514) 425-0025 Fax: (514) 425-0068 [email protected] National Sales Manager Ross Anderson Ph: (519) 429-5188 Fax: (519) 429-3094 [email protected] Quebec Sales Josée Crevier Ph: (514) 425-0025 Fax: (514) 425-0068 [email protected] Western Sales Manager Tim Shaddick [email protected] Ph: (604) 264-1158 Fax: (604) 264-1367 Production Artist -Emily Sun Canadian Biomass is published six times a year: February, April, June, August, October, and December. Published and printed by Annex Publishing & Printing Inc. Printed in Canada ISSN 0318-4277 Circulation Carol Nixon e-mail: [email protected] P.O. Box 51058 Pincourt, QC J7V 9T3 Subscription Rates: Canada -1 Yr $49.50; 2 Yr $87.50; 3 Yr $118.50 Single Copy -$9.00 (Canadian prices do not include applicable taxes) USA – 1 Yr $60 US; Foreign – 1 Yr $77 US Occasionally, Canadian Biomass magazine will mail information on behalf of industry-related groups whose products and services we believe may be of interest to you. If you prefer not to receive this information, please contact our circulation department in any of the four ways listed above.. No part of the editorial content of this publica-tion may be reprinted without the publisher’ s written permission ©2011 Annex Publishing & Printing Inc. All rights reserved. Opinions expressed in this magazine are not necessarily those of the editor or publisher. No liability is assumed for errors or omissions. All advertising is subject to the publisher’ s approval. Such approval does not imply any endorsement of the products or services advertised. Publisher reserves the right to refuse advertising that does not meet the standards of the publication. www.canadianbiomassmagazine.com 4 Canadian BIOMASS AUGUST 2008
Canadian Biomass September/October 2011: Page 4
