North American Pellet Prices Trend Upward For Canada, Down For U.S.

The U.S. and Canadian Pellet Feedstock Price Indices increased in early 2018, driven mainly by higher demand for pellets in Europe and Asia, according to the North American Wood Fiber Review. The pellet feedstock price indices for North America, launched by WRI in 2013, have trended upward in Canada during most of 2017 and early […]

The U.S. and Canadian Pellet Feedstock Price Indices increased in early 2018, driven mainly by higher demand for pellets in Europe and Asia, according to the North American Wood Fiber Review.

The pellet feedstock price indices for North America, launched by WRI in 2013, have trended upward in Canada during most of 2017 and early 2018 but declined in the U.S. during the same period. The level of availability of sawmill residues was the major driver for the price corrections the past year.

Wood fiber costs for pellet producers in both Canada and the U.S. were slightly higher in the 1Q/18 than in the previous quarter, continuing an upward trend that started in early 2017. In Western Canada, the difficult weather conditions during the winter months hampered harvest operations, forcing multiple sawmills to either slow production or take limited downtime in the first quarter. The lower sawmill operating rates resulted in reduced supplies of residues for pellet manufacturers, forcing some to use more costly forest biomass in their feedstock mix. The total fiber cost for Canadian pellet producers has slowly moved upward during 2017 and early 2018 to reach a three-year high in the 1Q/18.

The Pellet Feedstock Price Index for Canada (PFPI-CA), reported in U.S. dollars, rose by 8.1% y-o-y to reach US$44.21/odmt in the 1Q/18, according to the North American Wood Fiber Review. Much of this increase was the result of a strengthening of the Canadian dollar against the U.S. dollar.

Pellet feedstock costs in Western Canada are likely to increase overall in 2018 because of the shrinking availability of sawlogs for the region’s sawmills, a crucial source of bi-products for the pellet industry.

From the American Journal Of Transportation: https://www.ajot.com/news/pellet-feedstock-price-indices-for-north-america-trend-upward-for-canada-and-down-for-us

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