By Erin Voegele
A recent report filed with the USDA FAS’s GAIN predicts the EU market for wood pellets will likely grow this year but cautions future expansions could be limited by sustainability requirements introduced by individual member states.
According to the report, nearly half of the EU’s renewable energy is currently generated from the combustion of solid biomass, not including municipal solid waste. This includes wood chips and pellets. The EU consumes approximately 75 percent of the world’s wood pellets and accounts for about 50 percent of global production. In 2017, 40 percent of EU pellet consumption went to residential heating, with 33 percent to commercial power, 14 percent to commercial heating and 12 percent to combined-heat-and-power (CHP).
The EU consumed an estimated 27.35 million metric tons of wood pellets last year, up from 24.15 million tons in 2017. Wood pellet consumption is expected to increase to 30 million metric tons this year.
The EU is expected to produce 18.1 million metric tons of wood pellets this year, up from 18.85 million metric tons in 2018 and 15.3 million metric tons in 2017. Imports are expected to increase to 12.2 million metric tons in 2019, up from 10.355 million metric tons in 2018 and 8.692 million metric tons in 2017. EU exports of wood pellets are expected to remain at the 2018 level of 170,000 tons this year, down from 195,000 metric tons in 2017.
According to the report, the EU had 656 pellet plants in place in 2017 with a combined capacity of 22.75 million metric tons. Capacity increased to an estimated 24 million metric tons last year, and is expected to reach 25 million metric tons in 2019. Capacity use is expected to reach 72 percent this year, up from 70 percent in 2018 and 67 percent in 2017.
In 2018, the U.K. was the top EU consumer of wood pellets, with 8 million metric tons, followed by Italy with 3.75 million metric tons, Denmark with 3.5 million metric tons, Germany with 2.19 million metric tons and Sweden with 1.785 million metric tons. France, Belgium, Austria, Spain, the Netherlands and Poland were also among the top 11 EU consumers of wood pellets last year.
The U.K. imported 7.829 million metric tons of wood pellets last year, with 4.88 million tons of that volume imported form the U.S. Denmark imported 3.813 million tons of pellets last year, including 623 tons from the U.S. Italy imported 2.242 tons of wood pellets in 2018, including 88,000 tons from the U.S, while Belgium imported 1.137 tons, including 538,000 tons from the U.S.
Germany was the top EU producer of wood pellets in 2018, with 2.415 million metric tons, followed by Sweden with 1.845 million metric tons and Latvia with 1.575 million metric tons. France, Austria, Estonia, Poland, Spain and Portugal were also among the top nine EU pellet producers last year.
The U.S. was the top supplier of wood pellets to the EU last year, with 6.139 million tons, followed by Canada with 1.762 million tons and Russia with 1.365 million tons.
According to the report, a key factor in being able to capture the demand in the EU market and benefit from its growth potential is the sustainability of supply. “European traders and end-users of industrial wood pellets are calling for clear, consistent, harmonized and long-term government regulations,” said the authors in the report. “In the absence of EU-wide binding criteria for solid biomass, several EU member states, including Belgium, Denmark, and the Netherlands, developed their own rules in response to the growing use of wood pellets.”
BY MARY PEREZ
Largest wood pellet manufacturer in the U.S. is proposing to build the world’s largest wood pellet mill in Lucedale, Mississippi in George County. Some residents are for it, others question environmental impact.
Residents of Lucedale who showed up in force to a public hearing Tuesday already made up their minds about the largest wood pellet mill in the country locating in their town.
They wore stickers announcing their position. And they weren’t swayed by speakers who came mostly from outside the area, arguing that while Enviva might be good for the bottom line, it might not be good for the health of the community.
The company proposes building a $140 million pellet plant in the George County Industrial Park in Lucedale and a $60 million shipping terminal in Pascagoula. The state Legislature appropriated more than $2 million to fix the rail spur between the two.
The pellets will be made mostly from pine trees in and around George County and shipped overseas to supply fuel for power plants in the United Kingdom, Asia and other countries.
Tuesday’s meeting was the last step in the review process before the Mississippi Department of Environmental Quality decides whether to approve the pollution control equipment so the plant can operate within the legal limits of Mississippi. The decision could come as early as the June 11 meeting of the MDEQ review board, which meets the second Tuesday of each month.
By Molly Priddy
The U.S. timber industry scored a win on April 9 in the decades-long battle with Canada over softwood lumber, after the World Trade Organization ruled in its favor.
On April 9, the WTO decided that the United States Department of Commerce had done the correct calculations when it determined anti-dumping duties on Canadian softwood lumber.
“It’s a victory for the United States and the forest products industry,” said Chuck Roady, general manager of F.H. Stoltze Land and Lumber, as well as the president of the Montana Wood Products Association. “It was great to see an excellent decision on our part, because the U.S. rarely prevails in the WTO.”
Softwood lumber has been the subject of an enduring trade dispute between the two countries, and the most recent Softwood Lumber Agreement (SLA) lapsed in 2016 after 10 years.
The roots of the dispute come down to two different forms of government having two different methods of lumber harvest. Canada’s provincial government owns the majority of timberlands that provide trees to Canadian producers, charging an administered fee. In the U.S., the timberlands are typically privately owned, and the market determines the price of those logs through public sales.
“Both systems work until you sell the lumber in the United States,” Roady said.
In November 2017, the U.S. Commerce Department determined that Canadian exporters had sold lumber in the U.S. for 3.2 percent to 8.9 percent under fair market value, and that Canada is subsidizing softwood lumber producers at rates of 3.34 percent to 18.19 percent. The department determined that Canadian lumber producers should then pay a combined tariff of 20.83 percent.
In its mixed ruling on April 9, the WTO determined that the U.S. use of “zeroing” to calculate the anti-dumping duties is not prohibited. In the past, the organization had ruled against the methodology.
The ruling also determined that the U.S. had violated international trade rules when it calculated the tariffs on softwood lumber imports, which Canada applauded.
By Ana Swanson and Damian Paletta
The Trump administration announced on Monday it is planning to impose a roughly 20 percent tariff on softwood lumber imported from Canada, in what may be the biggest trade dispute between the U.S. and Canada in over a decade.
The Obama administration began the review of trade in softwood lumber last year out of concern that Canada was subsidizing its wood industry in a way that hurt U.S. rivals. The decision to impose what are known as “countervailing duties” in retaliation for Canada’s wood subsidies, which will be announced Tuesday, is subject to a final review by the International Trade Commission, an independent federal agency that advises the government on trade policy.
The decision, however, allows U.S. Customs and Border Protection to begin collecting the funds from Canadian importers immediately. Five Canadian companies were a part of the investigation, and the United States will seek to collect money from four of them retroactively for actions taken in the past 90 days, Ross said.
Ross said this could amount to $1 billion in new tariffs, as well as $250 million in retroactive collections. All other Canadian softwood lumber companies will face the same tariff of 19.88 percent going forward.
Softwood lumber is a major export of Canada, which sold $5.8 billion in lumber to the United States last year, giving it about 31.5 percent of the U.S. market. It’s the fourth largest export from Canada to the United States after oil, gas and cars.
By Tim Portz
The combined export value of wood pellets, ethanol and biodiesel for U.S. producers has flirted with $3 billion since 2012, and depending upon how the final numbers shake out for last year, 2016 may very well be the year this milestone is surpassed. For both wood pellets and fuel ethanol, export numbers have never been higher than they are right now, and all three sectors are eyeing foreign markets as a means to significantly grow their businesses.
An analysis of the same data reveals key and informative differences. While foreign markets are an important part of the overall market picture for fuel ethanol and biodiesel producers, exports account for less than 10 percent of annual production while, from a volumetric perspective, wood pellet production in the U.S. is heavily reliant on foreign markets.
Now, the looming question is, what impact will a Trump administration, which campaigned on a promise to revisit the nation’s trade agreements, have on the export opportunities for each of these industries?
Global Market Leaders
In both the fuel ethanol and wood pellet categories, the U.S. can boast the largest production capacity and the largest share of the global export market. In both cases, U.S. exports outstrip the closest competitor by a wide margin. Wood pellet export volumes for U.S. producers were well over 4 million tons, while Canada has yet to surpass 2 million tons of exports. Brazil is the world’s second leading producer of fuel ethanol, and while production and export volumes there vary from year to year, in 2015, its export volumes were about half of what U.S. producers achieved. Additionally, Brazil is a prominent market for U.S. ethanol producers taking over 100 million gallons in 2015.
From the April issue of Biomass Magazine, this data-packed report from Forest2Market suggests existing North American infrastructure can light the way for biomass exporters.
By Stan Parton, Forest2Market
The industrial wood pellet industry is catching its breath after an astounding surge since the turn of the millennium. Global production of pellets totaled roughly 2 million metric tons (MT) in 2001, and roughly 28 million MT in 2015. As this market continues to evolve globally, it’s a good time to step back and analyze other U.S. forest product exports by region and type. This data can tell us a lot about raw material utilization, and help uncover new opportunities for biomass and wood pellet growth in foreign markets. New demand for industrial wood pellets is on the horizon, as directives from the Paris climate agreement begin to take effect, and Asian markets—particularly the South Korean and Japanese markets—represent new opportunities for U.S. producers.
Global softwood lumber trade increased 12 percent year-over-year to reach a new record-high of 121 million m3 in 2016, per estimates by WRI. Since the global financial recession in 2009, there has been a steady climb in international trade of lumber, with shipments the past seven years having increased as much as 66 percent.
Since the global financial recession in 2009, there has been a steady climb in international trade of lumber, with shipments the past seven years having increased as much as 66 percent. While it is no surprise that China is a major driver for the dramatic rise in lumber shipments worldwide the past seven years, it is interesting to note that the US has actually increased softwood lumber imports more than China.
Canada’s forest sector is vital to a strong Canadian economy. Enhanced collaboration between federal and provincial governments will help to keep our forest sector, and the workers and communities that depend on it, strong and resilient.
Today, Canada’s Minister of Natural Resources, the Honourable Jim Carr, announced the creation of the Federal–Provincial Task Force on Softwood Lumber, which will share information and analysis to understand potential impacts and assess how to address the needs of affected workers and communities. Minister Carr will chair the domestic task force, while Canada’s Minister of Foreign Affairs, the Honourable Chrystia Freeland, leads softwood engagement with the United States.
There has been ongoing engagement with the provinces, territories and industry over the past two years as the Government of Canada has sought to negotiate a new deal with the U.S. on softwood lumber. This is the next step in our strategic approach to this issue, which strengthens our ongoing efforts on a priority file for the Government. Canada believes that a negotiated agreement that brings predictability and stability to industry on both sides of the border is the best possible outcome. The Government will continue to work closely with provinces, territories and the softwood lumber industry to vigorously defend the interests of the middle-class Canadians who depend on the industry. This work will continue outside of the task force.
The new Federal–Provincial Task Force on Softwood Lumber will assess current federal and provincial programming and ensure coordination of government initiatives to promote innovation, market diversification and transformation of the forest sector.
The forest sector is an important part of Canada’s economy. It directly employs more than 200,000 people across Canada. Softwood lumber exports were valued at $8.6 billion in 2015 — close to 70 percent of which was exported to the U.S.
By ROSS MAROWITS
The head of Eastern Canada’s largest lumber producer said he is confident he can demonstrate to American authorities this month that the region deserves free and unencumbered access to the U.S. market.
The forestry sectors of Ontario and Quebec are modelled after the market-based systems in the U.S., and that should convince the U.S. Commerce Department that the region doesn’t engage in the unfair trade of softwood lumber, Resolute Forest Products Inc. CEO Richard Garneau said.
“So based on this, I think that we deserve the right to have access in Central Canada – in Quebec and Ontario – to the U.S. market,” he said in an interview after Resolute released its fourth-quarter and 2016 results.
The Montreal-based company was recently selected by the U.S. Commerce Department – along with B.C. companies West Fraser Timber Co. Ltd., Canfor Corp. and Tolko Industries – to provide details on how they operate as part of its investigation into alleged unfair trade.
The producers are required to respond to a questionnaire by the end of the month. A U.S. auditor will then visit the four companies for follow-up.
Contact Hakan Ekstrom, Wood Resources International LLC
China imported record-high volumes of softwood lumber in 2016 and softwood log imports reached their second highest level on record. Despite relatively pessimistic forecasts for wood demand early in 2016, China’s need for imported wood picked up during the summer and fall with import volumes of both logs and lumber being up about 20% in the 4Q/16 as compared to the 4Q/15. Total importation of logs and lumber (in roundwood equivalents) reached almost 76 million m3 in 2016, which was up 17% from 2015, and almost 38% higher than five years ago, according to the Wood Resource Quarterly (WRQ).
Over the past decade, the importation of softwood lumber has grown much faster than that of softwood logs. From 2006 to 2016, lumber imports were up from just over two million m3 to over 21 million m3, while log import volumes were up from 20 million m3 to 34 million m3 during the same period.
From 2015 to 2016, Russia has increased its shipments of lumber to China by over three million to a total of 11.6 million m3 (this includes logs that have been canted to avoid log export taxes). With lumber markets in the Middle East and Northern Africa (the MENA countries) and Europe having been relatively weak the past few years, many sawmills in the Nordic countries have increased their presence in the Chinese market with shipments being up over 35% in 2016 from the previous year. Although lumber supply from Finland and Sweden still account for only six percent of the total lumber imports, the share can be expected to increase in the coming years because of more intense marketing of predominantly higher-quality spruce lumber for the Chinese furniture, millwork and construction industries.