Wood pellet manufacturers in both the United States and Canada are increasingly diversifying their feedstock to reduce fiber costs and take advantage of scrap materials, according to an analysis by the North American Wood Fiber Review (NAWFR), published by Seattle-based Wood Resources International LLC.
A growing source of fiber furnish in both countries consists of sawmill byproducts and forest residues, together accounting for more than 80 percent of the total feedstock in British Columbia, Canada, and almost 50 percent in the U.S. South.
Over the past 10 years there has been a clear shift in fiber-sourcing for pellet manufacturers in the U.S. South from logs to residues, says the NAWFR. In 2008, when the first large pellet plant was built, practically all fiber consumed by the plant was “low-quality, small-diameter logs from adjacent forests,” says NAWFR. It describes that fiber source as a “high-cost fiber furnish, since it needs to be chipped, hammered and dried before it can be processed to pellets, which adds substantial cost to the manufacturing of pellets.”
Increasingly, pellet plants throughout the southern states have turned to sawmill byproducts
and forest residues that in the past were left at harvesting sites. The NAWFR says for the past five years it has tracked the fiber sources for the pellet industry each quarter in the two major producing regions of North America (British Columbia and the U.S. South), and it has seen two clear trends:
- In British Columbia, pellet companies have moved from entirely relying on inexpensive sawdust from the local sawmills for its fiber furnish to increasingly supplementing its dominant fiber source with forest residues in the form of tree tops and branches left after harvest operations; and
- In the U.S. South, there has been an increase in the usage of residuals at the expense of cut logs.
In the first quarter of 2017, pellet plants in British Columbia consumed slightly more than 82 percent sawmill residues, while forest residues accounted for about 17 percent of feedstock. With an expected reduction in lumber production in the province in the coming years, pellet plants will increasingly have to rely on forest residues and low-cost logs for their furnish, since the available supply of sawmill byproducts will diminish, says NAWFR.
In the U.S. South, the fiber sourcing trend is the opposite of British Columbia, with expected increases in the use of sawmill residues as lumber production there is likely to expand in the future. From the first quarter of 2013 to the first quarter of 2017, the use of industry and forest residues increased from 33 percent to 47 percent of the total fiber furnish for the pellet industry, according to the NAWFR. This upward trend is expected to continue, especially in regard to the use of sawdust and microchips (chips manufactured from tree tops, tree branches and small-diameter trees from forest thinnings).
NAWFR has tracked wood fiber markets in the US and Canada for more than 30 years and includes prices for saw logs, pulpwood, wood chips and biomass in North America. Its 36-page quarterly report includes wood market updates for 15 regions in addition to export statistics for saw logs, lumber, wood pellets and wood chips.