YuLong News

Wood Pellet Market Outlook 2015

The Wood Pellet sector continues to grow rapidly. Increased production (particularly in North American) coupled with rising residential and industrial demand, means that the market has developed some liquidity thereby approaching real commodity status...


The Wood Pellet sector continues to grow rapidly. Increased production (particularly in North American) coupled with rising residential and industrial demand
 
The Industrial Market
 
Despite this, the market suffered several setbacks over the last twelve months. The announcements of zero investment in coal-to-biomass conversions in the UK at Rugeley (IP), Ironbridge (E.On), Tilbury (RWE) plus the delays in the Eggborough and Cottam plants put a dampener on things.
 
There was, however, encouraging news from the following countries:
 
The Netherlands - announced a new policy that will add 3.5 million tons to their annual consumption.
 
The UK - Drax confirmed their 4th unit conversion and RWE (Lynemouth UK) with its conversion or possible sale for conversion.
 
Belgium - Electrabel will be resuming their consumption of pellets and E.on who will either sell or undertake the conversion of their Largeloo plant thereby adding 2.5 million tons to its consumption.
 
Denmark - the authorities have committed their country to full decarbonisation and are considering biomass as a very important base load technology to be brought to their energy mix to compliment their huge offshore wind developments.
 
This is an industry that will double its industrial consumption capacity to about 20 million tons of wood pellets per year leading up to 2020.
 
The Residential Market
 
The larger markets continue to be Italy, Germany and Austria with Scandinavia continuing its traditional active role.
 
France ,and to a certain extent Spain, are rapidly increasing their consumption. It is expected that these two countries will take the majority of the Iberian production which is currently about 1.2 million tons per annum. Italy is following the trend of the Baltic suppliers. They have a similar annual output and are switching their industrial production - now left to the North American producers - to residential grade one. These will be sold in Scandinavia, Germany, Austria and Italy.

Other markets
 
Finally, it is worth noting the huge percentage increase in the South Korean Market. Although the market is still relatively small numerically, announced plans indicate levels of 6 million tons by 2020.
 
Japan, although reticent on the subject, does present a window of opportunity. The nuclear shutdown opens up the market for other base load energy industries – biomass and hydro being the only renewable ones capable of replacing the energy demands.

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